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USAID IRAQ 



W FROM THE AMERICAN PEOPLE 



IRAQ PRIVATE SECTOR GROWTH 
AND EMPLOYMENT GENERATION 



April 17, 2007 



Pharmaceutical and Medical 
Products in Iraq 




IZDIHAR 

IRAQ PRIVATE SECTOR GROWTH AND EMPLOYMENT GENERATION 



This publication was produced for review by the United States Agency for International 
Development. It was prepared by the joint venture partnership of The Louis Berger Group / The 
Services Group under Contract # 267-C-00-04-00435-00 




IZDIHAR 

IRAQ PRIVATE SECTOR GROWTH AND EMPLOYMENT GENERATION 



April 17, 2006 



Pharmaceutical and 
Medical Products in Iraq 



DISCLAIMER 

The author's views expressed in this publication do not necessarily reflect the views of the 
United States Agency for International Development or the United States Government. 

The IRAQ IZDIHAR project is funded by the United States Agency for International 
Development (USAID) and implemented by the joint venture partnership of: 



the Louis Berger Group, inc. 

Engineers Planners Scientists Economists 




TSG 



THE SERVICES GROUP 

International Economic Consulting 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

TABLE OF CONTENTS 

1.0 EXECUTIVE SUMMARY 1 

1.1 Introduction 1 

1.2 Background 1 

1.3 Pharmaceutical Sector 2 

1.4 Medical Products Sector 3 

1 .5 Ministry of Health, Public and Private Procurement 3 

1.6 Private Sector Investment 3 

1.7 SWOT 4 

1.8 Recommendations 6 

1 .9 Kimadia Improvement and Enhancement Programme 7 

2.0 INTRODUCTION 8 

3.0 BACKGROUND TO THE IRAQI PHARMACEUTICAL AND 

MEDICAL PRODUCTS SECTOR 9 

3.1 Introduction 9 

3.2 Background on Iraq 9 

3.3 Healthcare Sector 10 

3.3.1 Socioeconomic Indicators 10 

3.3.2 Mortality and Morbidity 10 

3.3.2.1 Morbidity and Mortality Statistics 1 1 

3.3.2.1 .1 Basic Health Indicators 1 1 

3.3.2.1.2 Infant and Maternal Mortality and Morbidity 12 

3.3.2.1.3 Disease Incidence 13 

4.0 PHARMACEUTICAL SECTOR 16 

4.1 Introduction and Definition 16 

4.2 Pharmaceutical Market- Characteristics 16 

4.3 Sources of Supply 17 

4.3.1 Introduction 17 

4.3.2 Domestic Manufacture 17 

4.3.2.1 Public Sector 17 

4.3.2.1.1 Abu Ghurayb Veterinary Production 18 

4.3.2.1.2 Amiriyah Serum and Vaccine Institute 18 

4.3.2.1.3 Arab Company for Antibiotics Industry 19 

4.3.2.1 .4 Baghdad Factory for IV Solutions & Medical Gases Production.. 1 9 

4.3.2.1.5 Baghdad South Saline Production 19 

4.3.2.1 .6 Dawrah Foot and Mouth Disease Vaccine Production Facility.... 1 9 

4.3.2.1 .7 State Company for Drug Industries - Nineveh (Mosul) 20 

4.3.2.1.8 State Companies for Drug Industries - Samarra 21 

4.3.2.2 Private Sector 23 

4.3.3 Imports 24 

4.3.3.1 Sources of Origin 24 

4.3.3.2 Longitudinal study 26 

4.3.4 Estimates of Current Market Size 27 



TABLE OF CONTENTS 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

4.4 Estimate of Potential Market Size 28 

4.4.1 Introduction 28 

4.4.2 Drug Spending Per Capita 28 

4.4.3 Additional Sources of Supply 32 

4.5 Regional Market Comparisons 32 

4.5.1 Egypt 32 

4.5.2 Syria 33 

4.5.3 Iran 33 

4.5.4 Jordan 34 

4.5.5 Saudi Arabia 34 

4.6 Market Segmentation by Therapeutic Area 34 

5.0 MEDICAL PRODUCTS SECTOR 37 

5.1 Introduction and Definition 37 

5.2 Medical Device Imports into Iraq 38 

5.2.1 Comparative Market Size 40 

5.2.2 Medical Products by Sub-Sector 41 

5.2.3 Conclusion 42 

6.0 MEANS OF PHARMACEUTICALS AND MEDICAL PRODUCTS 
DELIVERY 43 

6.1 Introduction 43 

6.2 The Public Sector 43 

6.2.1 The Ministry of Health (MoH) 43 

6.2.2 Directorates and Facilities of Health Ministry 43 

6.2.2.1 Minister's Office 43 

6.2.2.2 Minister's Deputy of Administrative Affairs 44 

6.2.2.3 Ministry's Deputy of Technical Affairs 44 

6.2.2.4 Office of the National Consultant for Mental Health 44 

6.2.2.5 Legal Consultant's Office 44 

6.2.2.6 Ministry's Office 44 

6.2.2.7 General Inspector's Office 45 

6.2.2.8 Legal, Financial and Administrative Directorate 45 

6.2.2.9 Directorate of Medical Operations and Specialized Services 46 

6.2.2.10 Directorate of Planning and Resource Development 47 

6.2.2.1 1 Directorate of Technical Affairs 47 

6.2.2.12 Directorate of Projects & Engineering Services 48 

6.2.2.13 Directorate of Public Health and Primary Health Care 48 

6.2.2.14 General Company for Marketing Medicines & Medical Appliances 49 

6.2.2.15 Directorate of Popular Medical Clinics 49 

6.2.2.16 Directorate of Medical City 49 

6.2.2.17 Health Directorates of Baghdad and the Governorates 49 

6.3 Procurement in the Public Sector 49 

6.3.1. Introduction 49 

6.3.2 The Procurement Process 50 

6.3.2.1 Becoming a Recognised Supplier/Submitting a Tender 52 

6.3.2.1.1 Manufacturer. 52 

6.3.2.1.2 Supplier 52 

6.3.2.2 Domestic Preference 52 

6.3.3 Pharmaceutical Distribution 52 



TABLE OF CONTENTS 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



6.4 Procurement in the Private Sector 53 

6.5 Prescription, Dispensing and Distribution of Medicines 53 

6.5.1 The Pharmacy Licence 53 

6.5.1.1 Current Conditions 54 

6.6 Pharmaceutical Promotion 54 

6.7 Medical Products, Appliances and the Like, Procurement and 
Dispensing 55 

6.8 Kimadia Improvement and Enhancement Programme 55 

7.0 RISKS AND ISSUES 56 

7.1 TRIPS 56 

7.2 Tenders and Contracts 57 

7.3 Pricing, Price Control, and Price Differential 57 

7.4 Other Issues 57 

7.4.1 GMP 57 

7.4.2 Illicit Supply 57 

7.4.3 Distribution and Logistics 57 

7.5 SWOT 58 

Strengths 58 

Weaknesses 58 

Opportunities 58 

Threats 58 

8.0 CONCLUSIONS AND RECOMMENDATIONS 59 

8.1 Conclusions 59 

8.2 Recommendations 59 

8.3 Private Sector Investment 60 



Appendix A Chapter 30 Harmonised System Code 

Appendix B Nineveh Company 

Appendix C Al Mansour Company 

Appendix D Comtrade export data to Iraq 

Appendix E Kimadia brief 



TABLE OF CONTENTS 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

List of Tables 

Table 3.3.1 Socioeconomic Indicators 1 988/9 and 2000-2003 

Table 3.3.2.1 .1 Health Indicators 1 988/9 

Table 3.3.2.1 .1 Health Indicators 1 988/9 (continued) 

Table 3.3.2.1 .2 (a) Monthly average cases of malnutrition in children under 5 admitted to 

hospital 

Table 3.3.2.1 .2 (b) Reported mortality in children less than 5 years old from selected causes 

(less 3 northern governorates) 

Table 3.3.2.1 .2 (c) Percentage of low birth weight to total birth weight 

Table 3.3.2.1 .3 (a) Malaria incidence 

Table 3.3.2.1 .3 (b) Incidence of water born diseases 

Table 3.3.2.1 .3 (c) Leishmaniasis incidence in Iraq 

Table 3.3.2.1 .3 (d) Incidence of infectious diseases 

Table 4.1 Abbreviated selected HS headings of Section 6 Chapter 30 

'Pharmaceutical Products' 

Table 4.3.2.1 .7 Nineveh Pharmaceutical factory production 

Table 4.3.2.1 .8 (a) production - tablets 

Table 4.3.2.1 .8 (b) production - capsules/ampoules 

Table 4.3.2.1 .8 (c) production - ointments 

Table 4.3.2.1 .8 (d) production - syrups/drops 

Table 4.3.3.1 Summary table of pharmaceutical reported exports to Iraq 

Graph 4.3.3.1 Pie chart representing sources of pharmaceutical reported exports to Iraq 

in 2005, by value 

Table 4.3.3.2 Gross USD spent on pharmaceutical imports 1 980 - 2005 with per capita 

nominal expenditure 

Graph 4.3.3.2 (a) Iraq pharmaceutical imports 1 980-2005 USD nominal 

Graph 4.3.3.2 (b) Adjusted pharmaceutical spend USD/capita 1 980-2005 

Table 4.4.2 Drug spending per capita shows the spending per capita for OECD 

countries 1996 

Graph 4.4.2 (a) OECD Expenditure on pharmaceutical products (drugs) per capita 

Graph 4.4.2 (b) Proportion of GDP spent on healthcare against GDP per capita 

Graph 4.4.2 (c) Pharmaceutical spend versus GNP for Iraq and regional neighbours 1997 

Graph 4.4.2 (d) Import spend (adjusted to 2005 dollars), with the linear trend line to 

demonstrate potential pharmaceutical spending 

Graph 4.4.2 (e) Total USD import spend adjusted 2005 dollars with trend 

Table 4.6 Cost of prescriptions dispensed in various disease areas UK 1 995-2003 

USD millions 

Table 5.1 Selected HS headings of Section 1 8 Chapter 90, Heading 901 8 ff. 

Table 5.2 Medical Products Exports to Iraq 

Graph 5.2 Sources of medical appliance and device imports into Iraq 2005 

Table 5.2.1 Iraq Comparative Market Size and Potential Market Value; medical 

products 2000 

Graph 5.2.1 (a) Iraqi market in comparison to other MENA countries 

Graph 5.2.1 (b) Iraq in comparison to neighbouring markets 

Table 5.2.2 Iraq medical device market by sub-sector 

Diagramme 6.3.2 Relationships in the first stages of the procurement process 

Diagramme 6.5.1 Pharmaceutical distribution chain into the private retail market 



TABLE OF CONTENTS 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 



1.0 EXECUTIVE SUMMARY 

1.1 Introduction 

The aim of the study is to analyse the pharmaceutical and medical products sector to 
enable the development of recommendations for private sector business investment 
strategies and programmes. This has been conducted, within the constraints of the current 
circumstances, to analyse the demand side of the sector, the nature of procurement and 
distribution within Iraq, and where available, examine current supply side, public and 
private, and competitive interests. 

The report looks at the supply of products within these sectors, and then examines the 
formal procurement and distribution system, and then the current position. 

1.2 Background 

Iraq has been through a turbulent three decades, in which it has been involved in three 
major conflicts, namely the Iraq-Iran war, the invasion and subsequent defeat and retreat 
from Kuwait, and finally the invasion of Iraq itself with the removal of the Saddam regime. 
This was immediately followed by the CPA administration, followed by the Interim 
Governing Council and then a duly elected Iraqi Government. In the period between 1991 
and 2003 UN sanctions were imposed on the country. 

Prior to the Iraq-Iran war it was generally recognised that Iraq had an effective and well 
managed public health system. Pharmaceutical products and medical services were 
generally heavily subsidised and most of the population received adequate health care. It 
is noted however that there were then, as now, a significant variance between those 
services in rural, remote areas, and the urban population. 

The period of sanctions had a distinctive effect on the healthcare sector, and, as it pertains 
to this report, pharmaceutical spending. During this time, particularly prior to 1996, when 
the regime signed a Memorandum of Understanding (MoU) with the UN, the regime spent 
(UN estimate) USD 40-50 million, down from nearly USD 200 million previously. The 
health of the nation suffered commensurately, with rises in infectious and communicable 
diseases, infant, perinatal and maternal mortality, and a significant decrease in average life 
expectancy. In addition with restrictive diets effectively imposed by the regime in response 
to sanctions, dietary complications dramatically increased the susceptibility, through 
malnutrition, of the population to nutritional deficiencies and consequential susceptibility to 
infection. 

Following the second Gulf War with the war damage on power generation and collateral 
damage to water treatment plants, health further degenerated with increases in water born 
diseases, particularly again affecting the young and the elderly. 

It is generally believed that the regime manipulated the lack of pharmaceuticals and 
declining healthcare system to gain sympathy for its, understandable, position against 
sanctions. However the impact was significant, and over that period there were large 
increases in the incidence of conditions such as kwashiorkor, marasmus and other 
nutritional disorders. 



1.0 EXECUTIVE SUMMARY 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

Common childhood diseases increased significantly with mortality from measles, whooping 
cough (pertussis) and mumps. With lack of preventive active vector control programmes, 
acute forms of malaria (particularly in the Northern Governorates) and visceral 
leishmaniasis increased, and indeed geographically spread. The incidence of tuberculosis 
significantly rose. 

Water born disease also rose, particularly the incidence of cholera, diphtheria and typhoid. 
This was also due to the requirement of the UN resolution to remove weapons of mass 
destruction (WMD) that severely restricted the supply of chlorine to the water treatment 
plants. 

1.3 Pharmaceutical Sector 

Pharmaceuticals in Iraq are supplied either domestically or through imports. Prior to 2002 
there was a single (state owned) pharmaceutical production company in Iraq, variously 
estimated at supplying 20-30% of the basic needs of the country. The balance was 
imported. In 2002 the company was split, and respectively two companies, Samarra and 
Nineveh were ordained. It is important to note that the purchase and distribution of all 
pharmaceutical and medical products prior to 1994 were in public control, as discussed 
below. Subsequent to that year, relaxation of controls of private industry allowed the 
development of private pharmacy outlets with up to an estimated 700 being established. 
However, the procurement of pharmaceuticals (and medical products) for the main lies 
wholly within the remit of Kimadia, the operational arm of the Ministry of Health (MoH). 
This is effectively for the private as well as the public sector, thus the sector is 
characterised by: 

command economy 
an effective monopsony 
centralised purchasing and distribution 
pricing controls and subsidisation 
very low current consumption 

Domestic manufacture has been variously estimated, but currently probably accounts for 
50% by volume of pharmaceutical products. In 1989 this estimate was some 30%, and 
estimates vary but indicate that during sanctions it may have reached in excess of 60%. 
The report describes the imports into Iraq, from a historical perspective, with longitudinal 
data encompassing twenty-five years, with sources. The section concludes that the 
current market value is probably worth some USD 200 million, with a potential to grow to 
some USD 250 million by 2010. The market is compared with similar regional markets. 
This compares with a value ascribed in 1989 of some USD 360 million across the 
pharmaceutical and medical products sector. 

Domestic private manufacture comprise some 15 small licensed operations, in addition 
there are a variety of unlicensed manufacturers who have taken advantage of the current 
political and security situation to establish illegal operations. All of these produce generic 
products from imported active ingredients and excipients, mainly syrups, creams and 
ointments and suppositories. There is domestic manufacture of parenteral and i.v. fluids in 
the state sector, in addition a phial manufacturing facility was built, but is understood to be 
non-operational. 

Recent developments include investment into an antibiotic plant in the state sector. 



1.0 EXECUTIVE SUMMARY 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

1.4 Medical Products Sector 

This section defines and describes the medical products sector, which includes such items 
as orthopaedic devices, hospital consumables, and items such as X-ray tubes. All of these 
items, apart from small numbers of orthopaedic aids (wheelchairs, walking sticks, 
crutches) are imported through Kimadia. The estimated current value of the market is 
USD 63 million with a forecast value in 2008 of USD 80 million. Recent developments 
have included the investment for a syringe manufacturing facility funded by Iran, and 
reportedly an investment into the phial production facility. A regional comparison is 
included. 

1.5 Ministry of Health, Public and Private Procurement 

Procurement in Iraq, as described previously is managed entirely through an operational 
arm of the Ministry of Health known as 'Kimadia'. All public procurement is through public 
tender announced through Kimadia's web site - www.kim-moh.net . Under the rules of 
tendering the supplier has to be authorised by the Ministry to tender, one of the aspects of 
which is the notarisation of a letter appointing the supplier sole agent, or manufacturer for 
a specific product (or set of products, etc.). This is then reviewed by the MoH, a supplier is 
selected and the tender awarded. By inspection of the rules the system is very open to 
rent-seeking, and difficult to penetrate as a new supplier, given the nature of the 
pharmaceutical business, is restricted to products not covered by previous agreements. 
These rules are available on the web site cited. 

There is no pharmaceutical promotion or marketing in Iraq. 

Subsequent to procurement by the MoH the products are then distributed though 
Kimadia's own chain of warehouses and distribution centres. Allocation decisions are 
made by the Ministry, and there are often complaints that these decisions are made 
unfairly, that the Ministry creates shortages, and that pharmaceuticals particularly can 
arrive at the point of distribution past their sell by date. The Ministry also supplies the retail 
pharmacists, who then sell on. 

In the private sector sourcing has not been able to be quantified, however, it is known that 
some purchases are imported but a significant proportion comes from the Ministry, through 
Kimadia established mechanisms. This significantly distorts pricing, with the MoH 
effectively subsidising costs to the private sector, thus reinforcing profits in the sector. 

The Ministry is responsible for licensing and regulating manufacturing facilities, and retail 
pharmacists, which role it legally enforces through a variety of inspection teams. In the 
current situation the regulatory enforcement regime has failed and drugs are freely 
available in the marketplace, either having been sold there illegally by Kimadia/MoH, 
sourced from illicit imports, or from goods looted from the Kimadia warehouses. 

1.6 Private Sector Investment 

In conclusion there are a number of specific routes to entering the pharmaceutical sector in 
Iraq: these can be briefly summarised as: 

An external supplier 

An importer and distributor 

A low value manufacturer 



1.0 EXECUTIVE SUMMARY 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

A high value manufacturer 

Each of these may be evaluated separately; however, within the current system each of 
these has major constraints: 

External supplier. A major element is competition with current embedded 
contractors for major supplies; a new entrant has to establish credentials as being 
the sole supplier (agent) for tendered products or materials, or as a manufacturer 
gain acceptance for the company's product (s)'s through a lengthy process, thus 
suggesting only those that supply wholly new products or supplies gain access to 
the domestic market. 

Private importer/distributor: Current conditions require complicity with 
pharmaceutical distributorships; most of these are already in the hands of a select 
few wholesalers/distributors, requirement for licensing, opportunity for 
volume/margins low as main pricing in the control of the MoH/Kimadia. 

Low value manufacturer. Capital cost of establishing a business, real main 
competitors are the low value (unlicensed/illegal) manufacturers, and then there is 
the challenge of establishing a distribution chain. Opportunities for non-domestic 
players are small if not negligible. 

High value manufacturer: Capital cost of establishing, and maintaining plant, 
currently small domestic market, but this might be an option for the future. 

In the short term, until the conditions set out in the recommendations are fulfilled, there are 
few opportunities for external investors, except where these are government backed. In 
the long-term, with the additional support of the government funded research institutes 
there is a good prospective for the pharmaceutical industry in Iraq, albeit initially at the 
domestic level. 

An initial approach is potentially for a long-term investment at the SME level. It is 
suggested this would have to be a joint venture with a current manufacturer, whether, for 
cash and technology, with the manufacturer coming from the currently private, or a re- 
structured public sector. 

1.7 SWOT 

Strengths 

• Active manufacturing - public, private and illegal 

• Strong market demand 

• Active government procurement 

• Entrepreneurial culture developing 



Weaknesses 



Monopsony purchases 

Unregulated market sales (secondary/black/grey), of illegal imports, 

inadequately controlled domestic production, ineffective and sub-standard 

products 

Lack of regulatory enforcement of standards for GMP,GLP, pharmaceutical 

sales, product sourcing, patent protection etc 



1.0 EXECUTIVE SUMMARY 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Bureaucratic 

Price controls 

Differential pricing regimen 

Economic uncertainty 

Low real per capita consumption compared to OECD market 

Govt contracts unpredictable (only tendered when money available) 

Unreliable payment system 

Health care system in disarray 

Loss of healthcare professionals 

Shortage of qualified technical staff 

Sectarian issues 



Opportunities 



Potential privatisation programme(s) 

As public sector finances improve, per capita expenditure will grow 

Major import substitution opportunity 

Opportunity to licence in products 

Opportunity to buy into local producers with technology transfer package 

Opportunity in niche sectors, e.g., phials, sterile products etc 

Undervalued assets 

Unused facilities 

Joint ventures 

Specialist Manufacture - Long-term 



Threats 



Security situation (personnel) 

Rent seeking (bribery, corruption, protection rackets etc) 
Security situation (property) threat of theft, looting, vandalism 
Lack of effective banking and cash management systems 



1.0 EXECUTIVE SUMMARY 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

1.8 Recommendations 

This study by its nature was primarily a desk study with interviews being carried out 
whenever possible due to the means and circumstances under which was conducted, with 
restrictions on access to the factories, both public and private, and to the Ministry of 
Health. This preliminary study should be revised when conditions permit access to actual 
performance statistics, the Ministry of Health and its operating subsidiaries. 

It is apparent that the industry sectors considered are open to investment opportunity, 
however, the system constraints, explored in the body of the document, requires structural 
adjustment. Therefore, subsequent to the prime recommendation, the main 
recommendations of this report are of a policy and regulatory nature. 

Formal definition of the nature, business and manufacturing assets of each of the 
state enterprises must be established. 

The rules, regulations, by-laws by which a (private) entity may make an offer to 
supply goods and, or, services to the state sector should be revised. 

The appropriate provision under extant company law for a company to freely 
compete in the new liberal market economy without prejudice or favour (to include 
the provisions that will be made under free market legislation) should be able to be 
applied under the Kimadia procurement system. 

The proper registration of all businesses with appropriate deterrents and sanctions 
should be in effect. 

The Ministry of Health should carry out, and is enabled to carry out, its legal 
responsibility to ensure GMP and GLP, in each and every instance. 

The Ministry of Health, and in particular, its' operating subsidiary known as 
'Kimadia' should be thoroughly restructured, to enable transparency in its dealings, 
and that its functions be restricted. 

The system of licensing, approvals, and registration with its inherent opportunity for 
rent seeking should be reviewed and appropriate deterrent and sanction be 
introduced. 

There is a potential for a long-term investment at the SME level. It is suggested this would 
have to be joint ventures with a current operator, for cash and technology. 

It is apparent from this study, and many others cited, that there are significant opportunities 
for investment in the Iraq pharmaceutical and medical products sectors. 

However, as a result of many decades of operating under a command economy, and the 
last several decades of war, sanctions and internal strife a variety of measures need to be 
undertaken before a liberal market economy can exist in this sector. 

It is understood that a government which wishes to create a public health system, 
underwritten by the state must have control of its own purchases; however there exist 
constraints within the system, as outlined in the document, which allow opportunism and 
rent seeking. 



1.0 EXECUTIVE SUMMARY 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

This report was written with limited capacity to engage the Ministries and the domestic 
manufacturing sites, so there are inherent frailties within it. The recommendations are 
therefore prefaced with the need to conduct further research as conditions improve and 
circumstances permit. 

The pre-requisite for investment in the state sector is the creation of appropriate 
privatisation and restructuring mechanisms. For a variety of reasons the Government of 
Iraq and its agencies may not wish to privatise in one move, however, structure must be 
developed that allow the opportunity for private-public partnership programmes (PPP), 
private funding initiatives (PFI) or similar constructs. The following recommendations 
outline some of the preliminary steps to be taken. 

It is essential that reform of the state enterprises be undertaken to remove some of the 
gross inefficiencies that occur within the state sector, cross subsidisation, false pricing, 
embedded work practices, and in the pharmaceutical sector, the re-establishment of the 
compliance (GMP, GLP etc) inspection teams from the MoH in both the public and private 
sector. 

In addition the non-transparent price subsidisation of goods, through the MoH to both the 
public and private sector has to be reformed. 

1.9 Kimadia Improvement and Enhancement Programme 

There is a US Government funded initiative about to be launched that is to address many 
of the issues raised in this document, and make appropriate recommendations for the 
reform of the Kimadia organisation, and ultimately to their implementation. 



1.0 EXECUTIVE SUMMARY 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 



2.0 INTRODUCTION 



The aim of the study is to analyse the pharmaceutical and medical products sector to 
provide the basis for the development of recommendations for business development and 
investment strategies and programmes. 

The report looks at the supply of products within these sectors, and then examines the 
formal procurement and distribution system, and then the current position. 

Iraq has been, to all intents and purposes, a command economy for many decades and 
the pharmaceutical and medical products sector reflect this. Domestic manufacture of 
pharmaceuticals was until approximately 1994 entirely within the remit of single monolithic 
state company - The State Company for Drugs and Medical Supplies. Following that year 
ordinance was passed allowing the development of a private manufacturing sector, which, 
though small, still exists. Procurement within the sector however remains within a central 
purchasing and distribution organisation - Kimadia - a wholly owned operating company 
of the Ministry of Health. This organisation also supplies the private sector wherein the 
current situation the regulatory enforcement regime has failed and drugs are freely 
available in the marketplace, either having been sold there illegally by Kimadia/MoH, 
sourced from illicit imports, or from goods looted from the Kimadia warehouses, as well as 
the hospital and clinic outlets. Prior to the current period, however, corruption, as well as 
state supported mechanisms also enabled supply through Kimadia to the private sector. 

As is well known Iraq has suffered several decades of armed conflict, external and 
internal. In the 1980's the regime of Saddam Hussein prosecuted a fruitless war with Iran 
over the Al Faw peninsula which severely damaged the economy, and though indebting 
the country was supported by the West. In 1990 Iraq invaded Kuwait and subsequently in 
1991 was evicted with considerable long-term implications. The first of these was the 
destruction of a significant element of the military, the second was the explicit call upon 
the Iraqi people to remove the regime, which having been responded to by the Shia of the 
south and the Kurds in the north-east was not supported by the Allies. These risings were 
then brutally suppressed, to which the allies responded by creating the no-fly zones in the 
north and south, and an effective Kurdish safe enclave in the north-east. The third effect 
was the imposition of economic sanctions with the overt aim of destroying Iraq as an 
international threat with the destruction of weapons of mass destruction, and the covert, or 
implicit, aim of removing the Saddam regime. These sanctions caused the regime to 
respond in a manner that economically destroyed the country, created a humanitarian 
disaster that is reflected in the state of the healthcare industry today. 

Since the occupation the country has, and continues to experience, severe levels of 
criminal activity, violence, sectarian conflict bordering on civil war. In addition during the 
period of sanctions and subsequently, there has been no investment in the state owned 
enterprises, including the pharmaceutical manufacturing sector; this includes a significant 
lack of access to materials for routine maintenance, and spare parts as required. Thus 
most factories are in poor state of repair. It has not been possible to survey the domestic 
manufacturing facilities in the preparation of this report, however, with the depredations 
created through the sanctions regimen, lack of facility for full maintenance, it is understood 
that they are not functioning at capacity, and possibly, or probably would not meet GMP 
standards 1 . The private sector companies will also suffer from the same problems, though 
the 'illegal' (unlicensed opportunist manufacturers) facilities would never have intended to. 



Personal communication; February 2007. 



2.0 INTRODUCTION 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

3.0 BACKGROUND TO THE IRAQI 
PHARMACEUTICAL AND MEDICAL 
PRODUCTS SECTOR 

3.1 Introduction 

The following paragraphs give a basic background to the current medical situation in Iraq, 
with some data on morbidity and mortality statistics. Because of the current security, and 
political status within the country some of these data are old but compared with more 
recent data where this is available. It is recognised by the author that some of the sources 
are not reliable, per se, and many of the considered citations themselves recognise that 
quoted figures are estimates or are extrapolations based on previous census or survey 
figures. However they are quoted here to provide a view of the health status of the country 
to potential investors in the pharmaceutical and medical products market. 

3.2 Background on Iraq 

Prior to the last two decades Iraqi healthcare was generally recognised as being amongst 
the best in the region. However, a series of key events over these decades have 
effectively destroyed the effective provision of healthcare. From 1980-88 Saddam 
Hussein 2 fought an inconclusive but very costly war with Iran, and then in 1990 invaded 
Kuwait, followed by the Gulf War of 1991 . 

Following the liberation of Kuwait, sanctions were imposed by United Nations Security 
Council Resolution 687 with the overt purpose of encouraging Iraq to disarm its weapons 
of mass destruction and covertly to encourage the fall of the Saddam regime. The effects 
of these were economically disastrous, with the collapse of much of the country's 
infrastructure. Significantly the effects were enormous on the health care system, with 
estimates of deaths resulting from the effects of sanctions running to a million. UNICEF 
estimated the number of child deaths at 500,000. These deaths were as a result of lack of 
medical supplies, clean water and malnutrition. 

Because of the criticism, which rapidly mounted, of the humanitarian effects of the 
sanctions a series of UN Resolutions were passed creating the Oil for Food program, the 
first of these in 1991, however, the Government of Iraq (Gol) refused to acknowledge or 
comply until May 1996 when it signed a Memorandum of Understanding (MoU) allowing 
the Resolutions to take effect. The programme started in October 1997 with food 
deliveries in 1998. 

Following the 2003 invasion of Iraq the sanctions regime was lifted. 



2 CIA the World Factbook 2007; www.cia.gov/cia/publications/factbook/print/iz.html 



3.0 BACKGROUND 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



3.3 Healthcare Sector 

Iraq, as a country with a nominal population of approximately 27 million, an estimated GDP 
per capita of USD1 ,900 per capita (at PPP), but with potentially vast oil wealth should be in 
a position to provide a level of general healthcare commensurate with that of any of the 
richer gulf states. However, the general state of health in Iraq has been substantially 
reduced owing to the wars of 1991 and 2003, the period of sanctions following the retreat 
from Kuwait, and the mismanagement of the economy prior to and during that period. 
Following the removal of the Saddam regime significant looting and pillaging of healthcare 
facilities, the theft and destruction of equipment, medical supplies took place with 
enormous detrimental effect to the sector and healthcare in general. 

There are significant differences between the urban and rural medical service available to 
the respective populations. This has been exacerbated with the significant loss of 
healthcare professionals from the country, both on the medical professional - doctors, 
nurses, and the pharmacy side, from the specialist clinics the governorate general and 
specialist hospitals. 

The following paragraphs give, from a variety of (referenced) sources basic population 
statistics. It should be noted the significant difference between the 2006 figures given by 
the CIA Factbook and those offered by UNICEF and the WHO. Overall data offered by the 
former demonstrate a significantly healthier and longer lived population than the latter. 

3.3.1 Socioeconomic Indicators 

Table 3.3.1 gives basic socio economic indicators for the period prior to sanctions in Iraq 
1988-89 3 and2002/3 7 . 

Table 3.3.1 Socioeconomic Indicators 1988/9 and 2000-2003 



Indicator 


1 988/9 


2000-2003 


GNP per capita (USD) 


2,800 




% female literacy 


85% 


43% (2000) 


% population with health care 


93% 


98% (2001) 


% population with safe water 


90% 


85% (2002) 4 


% pregnant women with maternity care 


78% 


67% (2002) 


% pregnant women with trained attendant at 
delivery 


86% 


55% (2003) 



3.3.2 Mortality and Morbidity 

Communicable diseases are a major cause of mortality and morbidity in Iraq 5 6 . Three of 
the major killers are acute lower respiratory infections (ALRI), diarrhoeal diseases and 
measles. ALRI and diarrhoea alone account for 70% of deaths in children under 5 years of 



3 The Health Conditions of the Population in Iraq since the Gulf Crisis. World Health Organization, March 
1996 

4 It is noted that this figure is considered by domestic authorities to be too high; noting that the southern 
region was very badly affected, and Baghdad itself was badly supplied. It is possible, but uncorroborated, that 
the MoH, and or other parties, exaggerated these figures for political effect. 

3 WHO Communicable Disease Profile for Iraq. Updated 19 March 2003. WHO Geneva. 

5 Health in Iraq. The Current Situation, Our Vision for the Future and Areas of Work. Ala'din Alwan, 
Minister of Health. Ministry of Health. Second Edition, December 2004. 



3.0 BACKGROUND 



10 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



age. Typhoid increased threefold between 1996 and 2000, measles increased sharply in 
1997, and again in 2004. Hepatitis E outbreaks are increasingly reported. 

The increase in these diseases has been mainly a result of the sanctions regime 
introduced in the 1990s, and ironically the requirement to destroy weapons of mass 
destruction. These caused a lack of medical supplies, reduced 4 access to clean water - 
one of the consequences of banning the manufacture of chlorine - and malnutrition. And 
all of these exacerbate problems created by the effects of the various wars and internal 
suppression, internally displaced persons, refugees, slums, overcrowding, the destruction 
of sewage plants, restriction in the electricity supply etc. Cholera became endemic after 
1991, with outbreaks in 1998 and 2002 and diphtheria presenting potential problems. 

Vaccination programmes have since been put in place, with the MoH/USAID claiming 98% 
of children now vaccinated with MMR and 97% of children vaccinated against polio. 
However other vaccine-preventable diseases such as pertussis (whooping cough) and 
diphtheria also continue to occur throughout the country. Pertussis incidence remains high 
and appears to be increasing. 

Other significant infectious disease on the increase in this period are tuberculosis (TB) as 
a result of overcrowding and following the Gulf War malarial outbreaks, although the 
incidence has declined with the institution of vector control programmes. 

Visceral leishmaniasis has increased in central Iraq and the greater Baghdad area as a 
result of increased density of sandfly vectors, movement of people and deterioration in the 
health status of the population. 

3.3.2.1 Morbidity and Mortality Statistics 

3.3.2.1 .1 Basic Health Indicators 

Table 3.3.2.1.1 gives the basic health indicators for the Iraqi population prior to sanctions 
1988/9 and post occupation 2002/3 7 8 . 

Table 3.3.2.1.1 Health Indicators 1988/9 



Indicator 


1970 


1989/9(7) 


1990 9 


2000 


2003(7) 


2005 


2006(2) 


Population (millions) 












28.807 


26.78 


65+ Male 














0.38 


65+ Female 














0.42 


15-64 Male 














7.78 


15-64 Female 














7.6 


Pop. Under 18 












13.759 




Under 14 male 














5.39 


Under 14 female 














5.23 


Pop. Under 5 












4.322 




Median age 














19.7 



7 WHO Country Office in Iraq, www.emro.who.int/iraq 

8 With a variety of reporters there are significant differences in reported incidences; notably between the 
MoH, and various international organisations, sampling techniques etc, there are apparent significant 
differences. This section of the report is designed to give an overall picture of the status of the population at 
the given dates, not to represent accurately the given state. 

9 UNICEF: www.unicef.org/infobycountrv/iraq statistics.html 



3.0 BACKGROUND 



11 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 


Table 3.3.2.1.1 Health Indicators 1988/9 (continued) 


Indicator 


1970 


1989/9(7) 


1990 1U 


2000 


2003(7) 


2005 


2006(2) 


Pop growth rate 














2.66% 


GN l/capita (USD) 












2,170 




Literacy (200 
















No of births ( x 000s) 












978 




Birth rate per 1,000 population 




43 






30 




32 


No of under 5 deaths 












122 




Crude death rate per 1 ,000 
population 


12 


8.0 


8 




8 


9 


5.4 


Crude birth rate 


46 




39 






34 




Infant mortality, per 1 ,000 live 
births 11 




52 


40 




107 


102 


49 


Under 5 mortality per 1 ,000 live 
births 


127 


94 


50 




130 


125 




Neonatal mortality 








63 








Maternal mortality per 1 00,000 
live births 




160 






29.4 






Low birth weight (below 2.5 kg) 




5% 






6% 


15% 




Life expectancy (comb) 


56 


66 years 


63 


63.2 




60 


69 


Life expectancy (m) 








61.7 






67.8 


Life expectancy (f) 








64.7 






70.3 



3.3.2.1.2 



Infant and Maternal Mortality and Morbidity 



Table's 3.3.2.1.2 (a), (b) and (c) demonstrate the effects of malnutrition on childhood 
mortality the consequential incidence of nutrition related conditions and neonatal birth 
weight. These show that immediately prior to the war resulting from the invasion of Kuwait 
these were relatively low and subsequently showed a large increase immediately in 1991 
with this continuing increase to the limits of this data in 1995. 

Table 3.3.2.1.2 (a) Monthly average cases of malnutrition in children 12 under 5 
admitted to hospital 13 



Year 


Kwashiorkor 14 




Marasmus 15 




Other 
malnutrition 






No 


Per 100,000 


No 


Per 100,000 


No 


Per 100,000 


1990 


41 


2 


433 


14 


8,063 


269 


1991 


1,066 


34 


8,015 


258 


78,990 


2,542 


1992 


1,145 


36 


9,289 


269 


93,610 


2,511 


1993 


1,261 


38 


11,612 


349 


102,971 


2,989 


1994 


1,748 


51 


16,025 


465 


131,349 


3,613 


1995 1 ' 


2,237 




20,549 









UNICEF: www.unicef.org/infobycountrv/iraq statistics.html 
' ' Defined as death within the first year of live birth. There is discussion concerning reporting of live births, 
e.g., seriously under weight births, or undersized babies that die after birth, though on strict definition were 
'alive' i.e., showing signs of muscle movement, gasping etc in some countries are not reported. On a strict 
definition for 1997 in the US a comparative figure is 7.1 per 1,000 live births. 

12 The Status of Children and Women in Iraq: A Situation Report. UNICEF September 1995 cited Iraq 
Action Coalition. 1995 figure MoH figure cited Jan-July 

13 It is noted that apparent differences in total child population are caused by different reporting 
methodologies used by the different reporting authorities 

14 Caused by protein deficiency, early signs are apathy, lethargy, lack of stamina, loss of muscle mass, 
swelling, abnormal hair (sparse, thin) abnormal skin. Disabled immune system leads to susceptibility to 
multifarious infection. 

15 Wasting away, also called cachexia, caused by protein and calorie deficiency 



3.0 BACKGROUND 



12 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Table 3.3.2.1.2 (b) Reported mortality in children less than 5 years old from selected 
causes (less 3 northern governorates) 16 



Year 


No 


100,000 


1990 


8,903 


257 


1991 


27,473 


884 


1992 


46,933 


1,460 


1993 


49,762 


1,495 


1994 


52,905 


1,536 



Table 3.3.2.1.2 (c) Percentage of low birth weight to total birth weight 



Year 


% LBW 


1990 


4.5 


1991 


10.8 


1992 


17.6 


1993 


19.7 


1994 


21.1 



The average perinatal mortality rate for Iraq 17 was estimated to be 28 per 1,000 live births 
during the period 1989-90, similar to other countries in the region at the time. The average 
rose in the period 1999-199 to 107 per 1,000. The causes for this increase are low birth 
weight, perinatal infections, and birth asphyxia due to foetal hypoxia. Many of these could 
be prevented through management of communicable diseases, good care at birth by 
qualified attendants, tetanus toxoid use etc. 



3.3.2.1.3 



Disease Incidence 



The following paragraphs and tables give the incidence of specific diseases in the period 
1989 to 1994, and there where available the incidence of that disease since 2000. The 
diseases are namely: 

Malaria 

Cholera 

Typhoid 

Leishmaniasis 

Tetanus 

Poliomyelitis 

Diphtheria 

Pertussis 

Malaria 

Table 3.3.2.1.3 (a) 18 shows the incidence of malaria from 1989 to 1994. This clearly 
demonstrates the increase in incidence following the Kuwait war. In addition it 
demonstrates the significant difference between the northern states (the three 
governorates) and the rest of the country. This situation is still the case, however morbidity 
from malaria has significantly decreased with figures for overall incidence in 2003 being 
347 and in 2005, 47 l9 . 



Ministry of Health, Iraq cited WHO (5) op cit. Assumed all subsequent tables to be less the Northern 
Governorates. 

17 NasheitNA. Journal of Maternal-Fetal and Neonatal Medicine. 13 (1) 64-67 (2003). 

18 All the tables in this section refer to the 15 governorates and the 3 'northern governorates 
" WHO Country office, 1996 and 1997, www.emro.who.int/emrinfo/index.asp?Ctrv-Irq 



3.0 BACKGROUND 



13 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Table 3.3.2.1.3 (a) Malaria incidence 



Year 


Malaria Incidence rate 
(15 governorates) 


Malaria Incidence rate 
(3 Northern governorates) 




No 


Per 100,000 


No 


Per 100,000 


1989 


1,510 


10.4 


1,918 


87.2 


1990 


1,761 


11.7 


2,163 


95 


1991 


4,025 


25.9 


1,087 


46.1 


1992 


5,535 


34.4 


12,916 


530.2 


1993 


4,589 


27.6 


36,490 


1,466.0 


1994 


22,169 


128.7 


67,462 


2,585.2 



Enteric infections 

Table 3.3.2.1.3 (b) gives the incidence of enteric infections. Again it may be seen that 
during the period of sanctions the incidence increased, however subsequent reports (19) 
shows a significant decline in the incidence of cholera, to 517 in 2003 and 44 in 2005. 
This reference does not cite incidence for typhoid, however a similar picture would be 
expected. 

Table 3.3.2.1.3 (b) Incidence of water born diseases 



Year 


Incidence of cholera 


Incidence of typhoid^" 




No 


Per 100,000 


No 


Per 100,000 


1989 








1,686 


11.6 


1990 








1,691 


11.3 


1991 


1,217 


7.8 


17,524 


112.8 


1992 


976 


6.1 


19,276 


119.9 


1993 


825 


5 


18,724 


112.5 


1994 


1,344 


7.8 


24,474 


142.1 



Vector born disease 

Table 3.3.2.1.3 (c) offers the incidence of leishmaniasis 21 (kala azar) again showing 
significant increase in incidence through the period of sanctions. Thee sources do not 
giver overall levels of incidence however, the literature reports the use of management 
programmes, e.g., fly eradication that have significantly reduced the total incidence in 
specific provinces, e.g. Dhi Qar 22 . 

Table 3.3.2.1.3 (c) Leishmaniasis incidence in Iraq 



Year 


Leishmaniasis incidence 




No 


Per 100,000 


1989 


2,159 


14.9 


1990 


2,375 


15.8 


1991 


1 1 ,946 


76.9 


1992 


12,645 


76.6 


1993 


11,155 


67.0 


1994 


9,348 


54.3 



iu Typhoid incidence differs from cited figures in UNICEF Sept 1995 Op cit. where: 1989, 1,812; 1990, 
2,240; 1991, 17,524; 1992, 19, 276, 1993, 22,688; 1994, 24,436. 

21 A protozoan (Leishmania) infection of the skin, mucosal membranes or viscera transmitted through the bite 
of the sand fly. 

22 Jassim et al. Visceral leishmaniasis control in Thi Qar Governorate, Iraq 2003. WHO Eastern 
Mediterranean Health Journal 12 (Suppl. 2) 



3.0 BACKGROUND 



14 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Infectious diseases 

Table 3.3.2.1.3 (d) shows the incidence of tetanus, poliomyelitis ('polio'), diphtheria and 
pertussis (whooping cough) in children and infants during the initial sanction period in Iraq. 
Tetanus incidence was reported at in 2003, and up slightly to 6 in 2005. No cases of 
polio were reported in 2001 or 2005. Incidence of diphtheria declined from 16 in 2003 to 6 
in 2005, pertussis incidence is not reported. 

Table 3.3.2.1.3 (d) Incidence of infectious diseases 



Year 


Incidence of tetanus 
(< 15 years old) 


Incidence of poliomyelitis 
(< 15 years old) 




No 


Per 100,000 


No 


Per 100,000 


1989 


30 


0.21 


8 


0.12 


1990 


80 


0.53 


38 


0.57 


1991 


933 


6.01 


153 


2.22 


1992 


98 


0.62 


113 


1.58 


1993 


64 


0.38 


72 


0.97 


1994 


38 


0.22 


56 


0.73 




Year 


Incidence of diphtheria 
(< 5 years old) 


Incidence of pertussis 
(< 5 years old) 




No 


Per 100,000 


No 


Per 100,000 


1989 


71 


2.4 


342 


11.8 


1990 


144 


4.8 


397 


13.3 


1991 


511 


16.4 


1,537 


49.5 


1992 


369 


11.4 


1,601 


49.8 


1993 


240 


7.2 


767 


32.1 


1994 


132 


3.6 


534 


15.5 



Year 


Incidence of measles (< 5 years old) 


Incidence of meningitis(< 5 years old) 




No 


Per 100,000 


No 


Per 100,000 


1989 


5049 


174.1 


2,263 


15.6 


1990 


6,486 


216.1 


1,561 


10.4 


1991 


11,358 


366.6 


5,792 


37.3 


1992 


20,160 


627 


4,534 


28.2 


1993 


16,258 


468.5 


3,789 


22.8 


1994 


10,657 


369.4 


3,074 


17.8 



With widespread immunisation programmes, the reported indicator for measles in 2003 
was 433 with a rise to 604 in 2005. A widespread immunisation programme should help to 
reduce the total number of cases and should eradicate any associated mortality. 
Meningitis showed an increase to 135 in 2003 with a reduction to 48 in 2005. 

Other diseases and infections with decided increases over the period of sanction followed 
by the period subsequently include tuberculosis becoming endemic (3,381 in 2005), and 
significantly, an increase in the incidence of hospital acquired infections. 



3.0 BACKGROUND 



15 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



4.0 PHARMACEUTICAL SECTOR 

4.1 Introduction and Definition 

As noted this report covers pharmaceuticals, pharmaceutical products, certain medical 
consumables, medical products and devices. This section, for simplicity takes account of 
those products listed under the Harmonisation Code Chapter 30 - Pharmaceutical 
Products 23 (Ch 30 is appended in Appendix A see footnote). An abbreviated schedule is 
given in table 4.1. This also includes, as well as prescription and over the counter 
products (OTC). 

Table 4.1 Abbreviated selected HS headings of Section 6 Chapter 30 
'Pharmaceutical Products' 



PRODUCT 


HS Code 


Antisera 


300210 


Vaccines for human use 


300220 


Containing penicillin (bulk) 


300310 


Containing antibiotics (bulk) 


300320 


Hormones/steroids (bulk) 


300339 


Containing 2 or more ingredients (bulk) 


300390 


Penicillin or derivatives 


300410 


Antibiotics 


300420 


Insulin 


300431 


Corticosteroids 


300432 


Hormones/steroids 


300439 


Alkaloids 


300440 


Provitamins/vitamins 


300450 


Containing 2 or more ingredients 


300490 


Adhesive dressings 


300510 


Wadding, gauze, bandages 


300590 


Surgical catgut etc. 


300610 


Reagents for determining blood groups 


300620 


Opacifying material (for X rays) 


300630 


Dental cement etc 


300640 


First aid boxes & kits 


300650 


Chemical contraceptives 


300660 


Gel 


300670 


Waste pharmaceuticals 


300680 



4.2 Pharmaceutical Market - Characteristics 

The pharmaceutical market shares key characteristics of the economy; namely that it is a 
command, or centralised economy, with the significant elements that that implies. In 
addition the pharmaceutical market, as formally established, is effectively a monopsony, 
with probably in excess of 90% of pharmaceutical purchases managed through the 
Ministry of Health (MoH). The MoH issues public tenders, is responsible for the purchase, 
and through an operational subsidiary (known as Kimadia), the distribution of 



Embodied in the US 'Harmonized Tariff Schedule of the United States (2006) - Supplement 1 (Rev 2). 



4.0 PHARMACEUTICAL SECTOR 



16 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

pharmaceutical (and medical product) supplies to the public (or state) hospitals and clinics 
which constitute the greater part of the Iraqi healthcare system. 

During the period of sanctions, especially prior to the 1996 signing of the Memorandum of 
Understanding, supplies were very restricted into the MoH system. Throughout this period 
it is understood that the regime manipulated the supply of drugs and availability of 
healthcare for political reasons. 

The market is characterised by: 



command economy 

effective monopsony 

centralised purchasing, distribution 

pricing controls 

very low consumption 



4.3 Sources of Supply 

4.3.1 Introduction 

Until 1994 the supply of medicine generally was dominated by the public and semi-public 
sector with about 90% of drugs made available through the public budget system. 
Distribution, and marketing, again by law, was through the Kimadia (see below) system. 
From 1994 the government facilitated private enterprise and about 700 new pharmacies 
were opened. In 2003 private enterprise was estimated to supply some 25% of all 
pharmaceuticals. 

In 1989 MoH reported spending USD 360 million on imports of pharmaceuticals, vaccines, 
medical appliances and disposable supplies. 

By 1990 the supply of drugs started to be rationed, 1990-97 WHO estimated that the 
government distributed USD40-50 million per annum, some 1 0-15% of estimated needs. 

Thus supply can be split into the two key areas of domestic manufacture and imports, each 
of which is discussed below. 

4.3.2 Domestic Manufacture 

Domestic manufacture probably accounts for 40-50% of current domestic demand, though 
in 2003 this was reported as up to 60% previously and it is noted that all specialist 
products are imported. In 1989 the estimate was 30% contribution. 

The manufacturing capacity is split between the public sector, and the private sector. 

4.3.2.1 Public Sector 

The manufacturing facilities in the public sector comprise the following production 
facilities 24 : 

Abu Ghurayb Veterinary Production 



24 Sources include: Chemicals and Allied Products: Iraq Pharmaceutical Sector 2004. Coalition Forces 2004. 



4.0 PHARMACEUTICAL SECTOR 17 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

Amiriyah Serum and Vaccine Institute 

Arab Company for Antibiotics Industry 

Baghdad Factory for IV Production and Medical gases 

Baghdad South Saline Production 

Dawrah Vaccine Production 

State Company for Drug industries - Ninewa (Mosul) 

State Company for Drug Industries - Samarra 

Prior to 2002 the state or public sector comprised of the single company 'the State 
Company for Drugs and Medical Supplies - Ninewa & Samarra' which acted as a state 
holding operation for the above (less Veterinary Production unit). In that year the Nineveh 
operation was split off and created as a single corporate entity. 

Samarra now comprises: the eponymously sited headquarters and manufacturing 
operation, disposable syringe factory in Baghdad and the glass vials factory. 

A valuation by CPA in 2003 suggested a market price for the entirety of between USD 10 
and 20 million. 

Each entity is described in the paragraphs below, and then the state entities are described 
last with product lists. 

4.3.2.1.1 Abu Ghurayb Veterinary Production 

Produces veterinary supplies. 

Products: 

Cholera Vaccine 

Typhoid Vaccine 

Tetanus Anti-serum 

Foot and Mouth Disease Vaccine 

Other Parasitic, Bacterial, Viral Vaccines 

4.3.2.1 .2 Amiriyah Serum and Vaccine Institute 

Primary Serum and Vaccine Institute. 

Products: 

Cholera Vaccine 
Typhoid Vaccine 
Snake anti-venom 

In addition acting as a store for UNICEF, stock (2004) included: 
Polio 
DPT 
Rubella 
MMR 
Tetanus 
Hepatitis B 
Rabies 
Bacille Calmette-Guerin (BCG) 



4.0 PHARMACEUTICAL SECTOR 18 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

4.3.2.1 .3 Arab Company for Antibiotics Industry 

Produces antibiotics in vials, tablets, capsules, syrups, ointments and 
ampoules. 

Designed in 1984, built 1989-2001. 

Design capacity: 

300 million antibiotic capsule 

28 million injection vials 

18 million bottles of suspensions 

Production: 

Began producing Amoxicillin and Ampicillin in May 2002. 

Production June 2002: 

292,500 bottles of Amoxicillin 
5.76 million capsules of Ampicillin 

In February 2007 it was announced that the Ministry of Finance was to 
borrow over ID 9 billion 25 to purchase outstanding stock in the company. 

4.3.2.1 .4 Baghdad Factory for IV Solutions & Medical Gases Production 

Produces medical gases. It is the largest producer of medical gases in Iraq. 
Nitrous Oxide 
Oxygen 
IV Solutions 

Facilities include a glass workshop. 

Supplies ampoules to outside customers 
Capable of making medically unique items 

In 2003 it was reported that the IV factory was damaged beyond operation, 
with an estimated charge of USD 2 million for restoration. In addition it is 
believed that the glass ampoule (or vial) line is inoperative. 

4.3.2.1 .5 Baghdad South Saline Production 

4.3.2.1 .6 Dawrah Foot and Mouth Disease Vaccine Production Facility 

Products: 

Viral veterinary Vaccines 

Foot and Mouth Disease Trivalent Vaccine 

Rabies Vaccine 

Sheep Pox Vaccine 

Bacterial Veterinary Vaccines 

Rinderpest Vaccine 

Tetanus Vaccine 



25 



Press statement to As-Sabah by the Ministry of Labour and Social Affairs who is lending the money: ID 
9,651,684,000. 



4.0 PHARMACEUTICAL SECTOR 19 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



4.3.2.1.7 



State Company for Drug Industries - Nineveh (Mosul) 



26 



The Nineveh State Company for Drug Industries was formerly a part of the 
state controlled conglomerate for the production of pharmaceuticals and 
medicaments. It was incorporated as a separate entity in 2002. Accounts 
and basic information about the company are given in Appendix B. 

The company comprises a main facility for the production of the 
pharmaceuticals and a dedicated IV saline plant. It also states that the 
productions units are new and modern. 

Since incorporation it states that it has completed the building of a cancer 
product manufacturing unit and an antibiotic production unit, though it is 
believed that these are not yet operating. The company states an intention 
to expand by completing a unit for the production of inhalers. 

Production 

Table 4.3.2.1.7 gives the production capacity and production figures for the 
presentations manufactured by the factories. Production is described as: 
tablets; capsules; ointment and cream; syrup and drugs for the treatment of 
cancer. 

Table 4.3.2.1.7 Nineveh Pharmaceutical factory production 



PRODUCTS 


UNIT 
MEASUREMENT 


DESIGN 
CAPACITY 


AVAILABLE 
CAPACITY 


2002 
PRODUCTION 


Tablets 


Millions 


1,080 


810 


540 


Syrup 


1 ,000 Bottles 


17,550 


6,000 


6,000 


Oral Drops 


1,000 Bottles 


9,200 


1,500 


1,500 


IV Fluid 


1,000 Bags 


2,835 


3,600 


3,600 


Eye Drops 


1,000 Bottles 


6,750 


2,400 


2,400 


Ointments 


1,000 Tubes 


7,200 


6,000 


6,000 


Capsules 


Millions 


405 


180 


180 


Suppositories 


1,000 


10,620 


800 


800 



Therapeutic areas include: 
Antibiotics 
Anti-cancer 

Raw materials 

Raw materials to USP 23 and BP98 standards are imported, and these are 
mainly sourced from Italy, India China and Germany. See raw materials 
under Samarra. 

Financial Information 

A full financial schedule for the years 2002-2004 inclusive is given in 
Appendix B. It is noted that these figures differ from the ones presented in 
the company's web site and the equivalent Ministry of Industry and Minerals 
publication on the SOEs for 2002. 



The information is extracted from the web site of the Ministry of Industry and Minerals and a CD/brochure 
prepared by the Ministry on the State Owned Enterprises in 2005. 



4.0 PHARMACEUTICAL SECTOR 



20 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 



A summary of these accounts for 2004 are: 

Total assets of ID 13,831,079,000; total income of 7,191,596,000, with a net 
profit of 704,061,000, or 9.8% (USD 27 Assets: 9,408,897, revenue 
4,892,242 net profit 479,518). 

The company's figures for 2002 are earnings of ID 5,115,000,000 or USD 
1,739,100 28 . The company also reports for the same period fixed assets at 
1 ,81 1 ,000,000 ID, or USD 61 5,740 and a Certified Capital of 2,084,000,000 
or USD 708,560. 

Employees 

Employees are stated at 973, comprising 602 in production and 371 in 
administration. 

4.3.2.1 .8 State Companies for Drug Industries - Samarra 

The state company was claimed as one of the largest pharmaceutical 
manufacturing facilities in the Middle East, founded in 1957 as the principal 
domestic manufacturer of medicines. It consisted of the five listed facilities 
and manufactures a large range of products in a variety of formulations. In 
addition it manufactures some animal medications. It boasts a 
knowledgeable and skilled workforce, new equipment (at the time of 
reporting for 2002) including blister pack machines. 

It comprises: 

Samarra Drug Factory 

Baghdad Factory for Medical Gases 

Babylon Factory for Disposable Syringes and Medical Gases 

See the relevant sections above for details. 

The company has a development strategy that includes erection of a new 
facility (Ibn Sina) for the production of syrups, drops and antibiotics, and the 
rehabilitation of the quality control building and the development of an eye 
drops project. 

Equity Holdings 

In 2003 it was reported (CPA 29 ) that the company also has equity holdings 
in the Akai company in Iraq, and in companies in Jordan and the UAE. 

Production 

The company reports manufacturing over 300 medical formulations, these 
are listed in table 4.3.2.1 .8 below. 



27 



2004 Exchange rate, USD1 = ID 1,470 
u At an average exchange rate for 2002 of 1 USD =ID 2,941.176 

29 State Owned Enterprises - Company Overviews - OCPA - Ministry of Industry and Minerals; Coalition 
Provisional Authority 2003. 



4.0 PHARMACEUTICAL SECTOR 21 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Table 4.3.2.1.8 (a) production - tablets 



Algesic 


Libisex 


Samavit B-Co 


Allermine 


Libraxam 


Samavit B6 


Asmasam 


Metheprim 


Samavit C 


Asprin, adult 


Multisamavit M 


Sameron 


Asprin, infant 


Paracetol 


Sedilar 


Coldin 


Prisolone 


Tetravit 


Flu 


Rheuma 


T rave mine 


Gastrigel 


Samafurantin 


Valiapam 


Largapromactil 


Samalgin 





Table 4.3.2.1.8 (b) production - capsules/ampoules 



Allermine 


Erythromycin 


Samaphenicol 


Ampicillin 


Hemavit 


Samavit B1 2 


Atropine Sulfate 


Prenavital 


Tetravit 


B Plex 


Samacycline 





Table 4.3.2.1.8 (c) production - ointments 



Algesin 


Dermocure HC 


Samacycline Ophthalmic 


Betnosam 


Hydrocortone N 


Samaphenicol Eye 


Betnosam N 


Nystacort 


Smicks 


Burn cream 


Rheumalgin 


Zinc Castor Oil 


Dermocal Cream 







Table 4.3.2.1.8 (d) production - syrups/drops 



Allermine syrup 


Ferrosam syrup 


Samavit B-Co syrup 


Ampicillin drops 


Hypnoral syrup 


Samavit C drops 


Antipyrol drops 


Multisamaplex syrup 


Samilin syrup 


Antipyrol syrup 


Nasophrine nasal drops 


Sedilar drops 


Antispasmine drops 


Neo-dexon eye/ear drops 


Spastal pediatric drops 


Bronchodil infant syrup 


Otocaine ear drops 


Toniphos syrup 


Calcium/Vit B12 syrup 


Piperazine citrate elixir 


Tussilet syrup 


Coldin syrup 


Pulmocodin syrup 


Tussiram syrup 


Ferro B elixir 


Samacetamid eye drops 


Zincosulf eye drops 



It is reported that a phial line is in place in the factory, however it is not 
currently operating. 

Raw materials 

Raw materials to USP 23 and BP98 standards are imported; active 
ingredients are all imported, generally from wholesalers in Jordan/Syria as 
the quantities purchased tend to be small. Excipients (colorants/flavours, 
sugar etc) tend all to be purchased from Shorja - the largest wholesaler. 

Financial Information 

The company reported earnings in 2002 of ID1 8,055,000,000 or USD 
6,1 38,701 30 . It is assumed that these are net earnings. 



' At an average exchange rate for 2002 of 1 USD = ID 2,941.176 



4.0 PHARMACEUTICAL SECTOR 



22 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

The company also reports for the same period fixed assets at 
4,282,000,000 ID, or USD 1,455,880 and a Certified Capital of ID 
1,772,000,000 or USD 602,480. 

Current gross earnings are understood to be 3 billion ID per month with a 
reported nominal margin of 50% 31 . 

Employees 

Employees are stated at 3,220, comprising 2,836 in production and 384 in 
administration. 

Pricing and Margin 

In 2003 the pricing regimen was described as cost plus 30%, with the 
company running on a low margin, with no proper depreciation or re- 
investment programme. It was also reported that prices were some 30-40% 
cheaper than imported products. 

Production Costs 

It was reported that the majority of costs are associated with the import of 
raw materials, and packaging materials. 

4.3.2.2 Private Sector 

The manufacturing companies in the private sector tend to be small and to produce topical 
medicines, with no specialist products. 

There are 15+ private manufacturers, principally focusing on tablets and syrups. This 
group itself comprises two sections, a legally monitored and established private sector 
industry, and more recently illegal and unregistered manufacturers. This section will 
examine the former. The private sector went through a development process dictated by 
the competence of the respective plants to manufacture, therefore production units 
focused on, in turn; syrups come first as they are the easiest to manufacture (but do not 
overall have a high margin), then tablets, because of the huge demand - particularly for 
simple analgesics - paracetamol - for example. Iraqi current demand is for some 13 
billion tablets p. a., of which approximately 4 billion are domestically manufactured. The 
balance are imported. 

Subsequently ointments, creams are manufactured, with domestic manufacture supplying 
some 20% of total demand; then comes parenteral solutions, i.v. fluids and injection lines. 
This is followed by the manufacture of suppositories, rectal and vaginal. 

There is no private manufacturing facility for phials - though cost of production is relatively 
low for a high margin product, the manufacturing facility has a high capital cost 
requirement to achieve, and maintain the standards required of GMP (good manufacturing 
practice). 

All these companies are small, with relatively low gross revenues. 



31 Personal communication 



4.0 PHARMACEUTICAL SECTOR 23 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

The top companies are: 

1 . Thafor: Manufacturer of tablets and suppositories. It was noted that in 2000 
the manufacturing line cost less than USD 750,000. 

2. Al Mansour: A traded joint stock company with a significant ownership by 
the 'Pharmacists Syndicate'. In 2004 the company demonstrated a sales 
revenue of ID 390 million on which it showed a small loss of ID 3 million. 
Iraq stock exchange information is appended at Appendix C. 

3. Asharq Alawasit (Middle East Company): Described as the most 
competent. 

4. Akai: The biggest in the private sector. Established by an Indian company 
the company is now owned by the Arab League. The company produces 
antibiotics, in a filling, labelling and packing operation. 

5. Al Forat: Produces cough medicines and paracetamol. 

6. El Shahid: This company pioneered the manufacture of cough syrups in 
Iraq. 

Since the 2003 war there has been an increase in the number of unlicensed 
manufacturers, possibly up to 18, with little, or none, supervision by the regulatory 
authorities resulting in a consequential lack of GMP32, and obvious effects on healthcare. 

In the animal medicine/veterinary side, one company is listed, and traded on the stock 
exchange: 

1. Al-Kindi for the Production of Veterinary Vaccines and Drugs. This 
company was established in 1990, and on sales of ID 420 million showed a 
profit of ID 77 million (approximately USD 55,000) in 2004. The Company's 
annual return is in Appendix C. 

4.3.3 Imports 

4.3.3.1 Sources of Origin 

The author was not able to access import statistics for Iraq, therefore the sources of origin 
were compiled from two principal sets of sources; the export statistics of individual 
countries or blocks of countries where available; and Comtrade - the trade database of the 
UN. A full compilation of this data is given in Appendix D, for the period 1980 to 2005. 

The principal sources are the EU 25, notably France, Belgium and Germany, Switzerland, 
India, Jordan, with smaller quantities from Iran and Dubai, then with very low volumes 
emanating from a broad spectrum of countries 33 . 

Table 4.3.3.1 gives a summary of the values of reported exports to Iraq in the 
pharmaceutical, drugs and consumables listed as in HS chapter 30 (including 3006). 



32 Personal communication 



33 These additional countries include Bulgaria, Canada, Chile, Colombia, Hungary, Korea, Mexico, Morocco, 
Norway, South Africa, Sweden and Macedonia 



4.0 PHARMACEUTICAL SECTOR 24 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



These are given in totals, to quantify the potential size of the market; the numbers are then 
broken down into categories further in the chapter. 



Table 4.3.3.1 Summary table of pharmaceutical reported exports to Iraq 



34 



Source 


1999 


2000 


2001 


2002 


2003 


2004 


2005 


Jordan 








48,182,236 


39,233,885 


30,551,578 


25,679,119 


Dubai 














4,269,453 


EU25 


25,098,430 


41,823,289 


54,835,458 


67,199,639 


67,440,699 


72,001,677 


80,975,996 


Switzerland 








15,218,898 


5,892,771 


51,080,327 


24,723,158 


India 






5,040,000 


7,270,000 


7,820,000 


30,080,000 


18,370,000 


US 













178,000 


2,137,000 


1,793,000 


Japan 








2,226,874 


794,360 


257,519 


795,130 


Russian Fed 








5,399 




524,679 


1,170,374 


China 








4,785,260 


2,550,605 


471,214 


1,246,905 


Pakistan 










12,509 


69,832 


174,056 


Turkey 










1,921,404 


2,115,399 


2,715,324 


Iran 










3,301,806 


5,862,200 


8,550,850 


TOTAL 


25,098,430 


41,823,289 


59,875,458 


144,888,306 


129,146,039 


195,151,425 


170,463,365 



Notes: 

These figures are by reported values, where domestic sources discuss volumes, the comparative should be 
noted. The US figures given in the table are from the TradeStats Express - National Express Database, which 
is categorized as per the HS chapters and sections. Other categorizations used by the US authorities include 
the five figure end use code for pharmaceutical preparations of 40100 which then offers the following figures 
for exports to Iraq in value: 2003, USD 7,267,000; 2004, USD 2,151,000; and 2005, USD 2,787,000. In 
addition the three figure SITC code is used - 542, Medicaments (including veterinary medicaments) - which 
offers an FAS value of exports to Iraq of USD 130,000, and 541 medicinal and pharmaceutical products, other 
than medicaments (of group 542), which offers a figure of USD 1 ,731 ,000 for the same year. 



Graph 4.3.3.1 Pie chart representing sources of pharmaceutical reported exports to 
Iraq in 2005, by value. 




Sources: Jordan; Comtrade, Dubai; Dubai Customs Authority/Dubai World, EU 25, Eurostat, Switzerland, 
Comtrade, India Department of Commerce; Export Import Data Bank, USA; US Census Bureau, Japan, 
Russian Fed, China, Pakistan, Comtrade. 



4.0 PHARMACEUTICAL SECTOR 



25 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Within the Iraqi domestic market are also reported significant quantities of products of 
Egyptian and Syrian origin, though these are reported as part of the longitudinal study in 
the next section the recorded volumes are low. Both countries have an active 
pharmaceutical manufacturing sector, not dissimilar to that of Jordan, producing generics, 
reformulations largely exported to the MEA region. 



4.3.3.2 



Longitudinal study 



Table 4.3.3.2 shows the total pharmaceutical spend in USD (nominal, unadjusted) for the 
period 1980 to 2005 35 with the nominal amount per capita spend. Graph 4.3.3.2 
demonstrates this. 



Table 4.3.3.2 Gross USD spent on 

.36 



pharmaceutical imports 1980 - 2005 with per 



:apita nomina 


expenditure 










Year 


1980 


1981 


1982 


1983 


1984 


USD 


139,303,675 


147,860,611 


130,108,337 


85,904,365 


120,813,379 


Pop (mill) 


14 


14.531 


14.974 


15.417 


16 


USD per capita 


9.95 


10.18 


8.69 


5.57 


7.55 


Year 


1985 


1986 


1987 


1988 


1989 


USD 


185,095,081 


201,533,669 


158,669,875 


258,638,372 


238,796,578 


Pop (mill) 


16 


16.71 


17.127 


17.554 


18.012 


USD per capita 


11.57 


12.06 


9.26 


14.73 


13.26 


Year 


1990 


1991 


1992 


1993 


1994 


USD 


195,651,506 


49,740,973 


70,305,192 


101,391,816 


76,320,755 


Pop (mill) 


18.515 


19.07 


19.672 


20.309 


20.967 


USD per capita 


10.57 


2.61 


3.57 


4.99 


3.64 


Year 


1995 


1996 


1997 


1998 


1999 


USD 


115,620,749 


21,065,038 


76,785,334 


169,347,221 


114,080,279 


Pop (mill) 


21.632 


22.301 


22.977 


23.662 


24.36 


USD per capita 


5.34 


0.94 


3.34 


7.16 


4.68 


Year 


2000 


2001 


2002 


2003 


2004 


USD 


103,025,769 


148,089,234 


178,194,896 


143,134,293 


210,225,234 


Pop (mill) 


25.075 


25.806 


26.55 


27.03 


28.057 


USD per capita 


4.11 


5.74 


6.71 


5.30 


7.49 


Year 


2005 










USD 


174,179,699 










Pop (mill) 


28.807 










USD per capita 


6.05 











SITC Section 54 Medicinal and pharmaceutical products: Comtrade 
36 Population statistics: Informal communication; the figures represented here are possibly true for a 
theoretical entire population with no discount for the current mortality rate and the rapidly increasing 
migration. For the latter, figures may be estimated in Jordan from the family registration cards issued: At the 
end the of 2005 such a card had the serial number in the 649,000's, thus suggesting given a family size of 
four, a Jordanian Iraqi population of not less than 2.6 million, however Jordanian authorities estimated Vi 
million, and current figures assume 1 million each in Jordan and Syria through the formal and informal 
migration to Syria, estimated (BBC) at 750,000, in addition there are 150,000 in Egypt (UNHCR). There are 
communities further afield, and if these are taken into account, then should be added total populations 
(electoral commission list) Australia, Canada, Denmark, France, Germany, Iran, Jordan, The Netherlands, 
Sweden, Syria, Turkey, the UAE and the USA. IECI estimated 4 million voters at end Dec 2005. With an 
informal estimate of up to 655,000 dead (Lancet, though there is much discussion about the size, the number 
of violent deaths is significant.) a conservative estimate of loss of domestic population is approximately 5 
million. This equates to approximately 17% of the population. It is also worthy of note that a 
disproportionate number of the middle/professional classes have left, denuding the state of essential skill sets. 



4.0 PHARMACEUTICAL SECTOR 



26 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Graph 4.3.3.2 (a) Iraq pharmaceutical imports 1980-2005 USD nominal 



Iraq - Pharma Imports USD (nom) 



Z 

+■> 

Q 
(/) 

D 



300,000,000 
250,000,000 
200,000,000 
150,000,000 
100,000,000 
50,000,000 





M^>>>>>>WW 



16.00 


o 


14.00 


^ 


12.00 


c. 


10.00 


<0 

+■> 
'5. 

o 

1 

Q 

co 


8.00 


6.00 
4.00 
2.00 
0.00 



Nominal USD imports 



Nominal per capita spend 



Graph 4.3.3.2 (b) Adjusted pharmaceutical spend USD/capita 1980-2005 



Per capita expenditure 2005 dollars 



18.00 

16.00 

14.00 

12.00 

10.00 

8.00 

6.00 

4.00 

2.00 

0.00 




<f # <f f <f <f <f <f f <f ^ J> / 



4.3.4 Estimates of Current Market Size 

A nominal valuation of the sales revenue from the public sector is a revenue of some USD 
20 million based on the 2002 figures, and personal communication. The figure for the 
private sector is an estimate, based on the figures for Al Mansour with a revenue of 



4.0 PHARMACEUTICAL SECTOR 



27 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

approximately USD 270,000 in 2004. If all fifteen registered companies have the same 
order of revenue, that means a realistic maximum revenue of about USD 4 million. 

The two figures respectively of domestic manufacture, by value, (24 million) and imports 
(174 million) thus suggest a potential total domestic pharmaceutical market, by value, of 
USD 198 million. 

This offers a domestic pharmaceutical expenditure of approximately USD 7.3 per capita, 
which is significantly below that of OECD countries. 

There are considerations as noted that these figures do not accurately reflect actual 
expenditure, for example, it is reported that annual average expenditure on general 
antibiotics is USD 50 million annually and for Mobic (meloxicam) is USD 4.5 million. 

In 1989 the MoH reported spending 37 USD 360 million for imported pharmaceuticals, 
vaccines, medical appliances and disposable supplies; USD 100 million for raw materials 
for the state manufacturing operations, and a further USD 30 million for spare parts and 
the maintenance of health service equipment 38 . 

In response to the sanctions drug supply was rationed, and that between 1990-97 the 
WHO estimated that the government contributed USD40-50 million p.a. approximately 10- 
1 5% of needs. 

4.4 Estimate of Potential Market Size 



4.4.1 Introduction 

To estimate the potential size of the market in stable Iraq key indicators of total population 
and per capita spending in markets of a similar demographic profile may be made, and 
these in turn compared with markets with, for example larger GDP per head. In addition, 
to understand some of the shape of the market the morbidity and mortality statistics can 
indicate where market opportunity and development might lie. 

Taken together these figures can then give an indication of the range of total potential 
market size and the sector profile. 

4.4.2 Drug Spending Per Capita 

Spending on pharmaceuticals is given for 1996 in table 4.4.2, extracted from a study 39 , and 
then in graph 4.4.2 this expenditure is compared with the GDP per capita for those 
countries where both data sets were available (note the data set for GDP is 1997, one year 
later, however the comparison would appear valid). 

The findings of the study showed that there was a general uniformity across the OECD 
nations on the level of per capita spending on pharmaceuticals (median expenditure of 
USD 234, mean 240, standard deviation of 58, maximum of 349 and minimum of 126 
USD). The relationship between GDP per capita (adjusted for PPP) and the spend is 
practically flat, indicating that amongst the OECD there is no real trend between increased 
GDP and overall spend on pharmaceuticals. However, it could be assumed that these 



37 Cited in Medicines and Medical Supplies. United Nations Development Group, http://iraq.undg.org 

38 And USD 10 million for ambulances and logistical vehicles 



4.0 PHARMACEUTICAL SECTOR 28 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



countries have reached the optimum level of expenditure. Where a country has a low per 
capita GDP and low overall healthcare expenditure, it may be assumed that a relationship 
may well exist between an increase in GDP and an increase in healthcare expenditure. 

Amongst the OECD there is much greater variation in the proportion of healthcare 
expenditure which is spent on pharmaceuticals. This is shown in Graph 4.2.2 (b), showing 
that as GDP/capita increases the proportion of healthcare expenditure dedicated to 
pharmaceuticals decreases. The authors hypothesise that this is related to the purchase 
of pharmaceuticals on the international market, whereas the balance of healthcare is 
purchased domestically (usually). 

Table 4.4.2 Drug spending per capita shows the spending per capita for 
OECD countries* 1996 



Country 


Drug spending 
per capita USD 


Physician 

visits per 

capita 


Percent of total 

health spending 

on drugs % 


GDP per 
capita (1997) 


Australia 


202 


6.6 


11.4 


20,170 


Austria 


247 


6.3 


14.1 


21,980 


Belgium 


306 


8.0 


17.9 


22,370 


Canada 


258 


6.5 


12.5 


21,860 


Czech Republic 


234 


Na 


25.9 


11,380 


Denmark 


165 


5.4 


9.2 


22,740 


Finland 


209 


4.1 


15. 


18,980 


France 


337 


6.5 


16.8 


21,860 


Germany 


289 


6.4 


12.7 


21,300 


Greece 


236 


Na 


26.6 


13,080 


Hungary 


172 


14.8 


28.5 


7,000 


Iceland 


312 


4.8 


16.5 


n.a. 


Ireland 


126 


Na 


9.9 


16,740 


Italy 


284 


Na 


17.9 


20,060 


Japan 


349 


15.8 


20.8 


23,400 


Korea 


Na 


9.5 


Na 


13,500 


Luxembourg 


250 


Na 


11.7 




Mexico 


Na 


2.1 


N 


8,120 


Netherlands 


193 


5.7 


10.9 


21,340 


New Zealand 


194 


Na 


15.2 


16,600 


Norway 


174 


Na 


9.0 


23,940 


Poland 


Na 


5.4 


Na 


6,380 


Portugal 


282 


3.2 


26.3 


13,840 


Spain 


223 


N 


20.0 


15,720 


Sweden 


218 


3.0 


13.0 


19,030 


Switzerland 


190 


Na 


7.6 


26,320 


Turkey 


Na 


Na 


31.6 


6,430 


UK 


218 


5.9 


16.5 


20,520 


USA 


344 


6.0 


8.8 


28,740 


OECD 


234 


5.9 


15.9 





Extracted from Exhibit 5, Anderson, Gerard F and Poullier, Jean-Pierre. Health Spending, Access and 
Outcomes: Trends in Industrialized Countries. Health Affairs 18 (3) 178-192. 1999. Sourced OECD Health 
Data 98: A comparative analysis of twenty-nine countries. OECD 1998. 



4.0 PHARMACEUTICAL SECTOR 



29 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Graph 4.4.2 (a) OECD Expenditure on pharmaceutical products (drugs) per capita 

Expenditure on Drugs per capita 

GNP(PPP) per capita (1997) 
30,000 



39 



25,000 



20,000 



15,000 



10,000 



5,000 



USA 



Switzerland 



Norway 
Denmark " 



Japan 



Netherlands 

Australia 



UK 



Austria Canada y . France 

■ Germany 

Italy 



Sweden 



Ireland New Zealand 



Spain 



Greece 
Czech Republic 



Portugal 



. . Hungary 



I I I I I I 1 I I I I I I 1 I I I 1 I I I I I I I h 

126 172 190 194 209 218 234 236 250 282 289 312 344 

Expenditure (1996) USD 



Graph 4.4.2 (b) Proportion of GDP spent on healthcare against GDP per capita 

Expenditure on drugs 

Proportion of healthcare spend 




S 5 ' I I I I I I I I I I I I 

I 11,380 15,720 18,980 20,170 21,340 21,980 23,400 28,740 

GDP per capita 
Trend line 



4.0 PHARMACEUTICAL SECTOR 



30 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Graph 4.4.2 (c) Pharmaceutical spend versus GNP for Iraq and regional 
neighbours 1997 40 

Pharma Spend vs GNP (PPP) 

USD per Capita 1 997 





























Ibldtll 

■ 






CO 

^00 " 




CO bu 

°- 50 




X ad 




in 
























"q. 

CO 














Tu 


nisia 






CD 


3 £ 


kistan 


Iraq 


Egypt 

■ 






■ ■ 










- 




—I 


— I — 


1 — 


Syria 

1 — 




-\ 1 




H 


1 


1 



1,590 1,956 2,940 2,990 3,130 3,430 4,980 6,430 16,960 
Per Capita GNP (PPP) 



Graph 4.4.2 (c) shows the pharmaceutical spending against per capita GNP for regional 
countries. This graph is meant to demonstrate that the pharmaceutical spending per capita 
of Iraq is in line with regional norms (GNP was estimated, see footnote). Graph 4.4.2 (d) 
demonstrates the Iraqi spend per capita with the associated linear trend line. 

Graph 4.4.2 (d) Import spend (adjusted to 2005 dollars), with the linear trend line 
to demonstrate potential pharmaceutical spending 



9.00 
8.00 
7.00 
6.00 
5.00 
4.00 
3.00 
2.00 
1.00 
0.00 



Import Spend USD (2005 ajusted) 




1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 



-♦ — Real USD import spend per capita 2005 dollars 

Linear (Real USD import spend per capita 2005 dollars) 



The graph thus indicates that five years out from 2005 (2010) the current trend indicates a 
spend of USD 8.00 per capita, the range is approximately +/- USD 1.2, therefore an 
approximate spend might reach USD 9.20 per capita, if current conditions prevail. 



Source for GNP: World Development Report 1998/99 Key Economic Indictors: that for Iraq was taken as 
the mean of the range for the lower middle income group as per footnote (g) of Table 1(a) op cit. 



4.0 PHARMACEUTICAL SECTOR 



31 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Graph 4.4.2 (e) Total USD import spend adjusted 2005 dollars with trend 



300,000,000 -, 
250,000,000 
200,000,000 
150,000,000 
100,000,000 
50,000,000 




Import Spend USD (2005 adjusted) 




c* 



r& 



rs<b 



A 






f.r { J r& r& r& r& r& r& r,Q ' rfS J <£> 



S* ^ 



Q> 



■ Series 1 



Linear (Seriesi; 



On the basis of the foregoing the total potential market as given in graph 4.4.2 (e) is some 
USD 250 million, plus (or minus) the annual variance, the local public sector and private 
sector components. 

4.4.3 Additional Sources of Supply 

The formal means of supply are the private and public sector, in addition there is the black 
market, where participants recognise its illegality but are relatively informed, and the grey 
market, which is illegal, and many participants are uninformed; and additionally, the NGO 
imports. In particular the latter can be quite significant in certain areas, e.g. in child care 
(UNICEF) emergency relief (UNHCR). In terms of statistical reporting, many of the NGO 
products will be reported in customs declarations, however where they are not, the total 
consumption cannot be reported accurately. However, in terms of total potential market, 
on a commercial basis the figures as reported appear to be the most appropriate and best 
available. 

4.5 Regional Market Comparisons 

The paragraphs below look at the markets in a number of Near/Middle East countries. 

4.5.1 Egypt 

Multi-nationals account for probably some 65% of the USD 1.6 billion Egyptian market, 
direct local manufacture (30%) and 35% licensing agreement with Egyptian companies. 
The AstraZeneca company doubled employment to 350 people, USD32 million investment, 
capacity 250 mill tabs per year able to expand to 400 million per year. 



4.0 PHARMACEUTICAL SECTOR 



32 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

The market estimate offers a per capita consumption of this, the largest market in the 
Middle East/North Africa, of some USD 22 in 2006 41 , with a market growth of 4%. It is 
acknowledged that this study is not a full formal meta-analysis of the regional markets, and 
that there are discrepancies amongst reported figures, however, these are considered 
indicative of market status. Also notable is the significant difference between these and 
OWCD reported expenditures. Within this lies another aspect, of taxes, controlled prices 
and pricing regimes, margins dissimilar markets. 

There are approximately 30 pharmaceutical manufacturing companies in Egypt, most in 
the private sector, nine 42 of which are in the top 100 Egyptian companies by revenue, led 
by Egyptian International Pharmaceutical Industries Company (EIPICo) with a 2003 
revenue of LE 535.3 million (USD 91.5 million). In addition most multi-nationals are 
present in the country, and developments have included the 1998 purchase of a 90% 
stake in Amoun Pharmaceuticals by GlaxoSmithKline and the development this year of a 
new manufacturing site by AstraZeneca with an investment of USD 32 million. Notably in 
the last instance reference was made to the compliance of Egypt with the TRIPS elements 
related to the WTO accession completed in 2005. 

4.5.2 Syria 

In 1998 it was reported 39 that there were two state owned manufacturing companies in 
Syria: Thameco, owned by the Ministry of Industry and Dimas, by the Ministry of Defence, 
though the private sector was developing. At the time of writing 56 private companies 
were manufacturing, supplying 89% of the country's needs, 70% under special licence. A 
number of the most significant are listed in the footnote 43 . 

Syria has applied for WTO membership however the application has not yet been 
accepted. In terms of TRIPS, in 2000 the government passed a copyright that extended 
patent protection to pharmaceutical NCEs 44 and increased patent protection to twenty 
years, thus bringing it into line with TRIPS requirements for WTO accession. 

4.5.3 Iran 

In 1997 the total pharmaceutical sales were estimated at 1,045 million USD 45 , though 
another source 46 estimated at 1999 sales of only USD 600 million, representing 
pharmaceutical spending of USD 9 per capita. It was reported that in 1991 there were 
some 39 operating production units, and by 1995 these were supplying 93% of domestic 
pharmaceutical requirements, though this is believed now to have reduced to around 80- 
85% with the balance imported. The majority are state owned companies, with a small 



41 Pharma Outlook Quarter 1, 2006: Espicom Business Intelligence. 

42 [Company, (2003 revenue) EIPICo (536); Medical Union Pharmaceuticals (331); Pfizer Egypt (278); 
Amoun Pharmaceutical an Chemical Industries (259); Nile Pharmaceuticals and Chemical industries 
.Company (259); Cairo Pharmaceuticals and Chemical Industries Co (197); Alexandria Pharmaceuticals and 
Chemical industries (191); Memphis Pharmaceuticals (142) Arab Drugs and Chemical Industries (134). Net 
profit margins range for these from 13% (Arab Pharma. 2006) to 24% (EIPICo 2005) and for listed Pharco 
48%. 

43 Adamco Pharmaceutical Industries; Aleppo Pharmaceutical Industries; Al Fares Pharmaceuticals; El Saad 
Pharmaceuticals; MBC Pharmaceutical Industries; Medipharm; Oubari Pharmaceutical Products; KC Pharma; 
Unipharma; Barakat Pharmaceutical Industries. 

44 SABA Bulletin November 2000. 

45 Source: World Drug market Manual 1998: Asia, Africa & Australasia. IMS World Publication 1998. 

46 Healthcare Markets Fact Book 2003. Espicom Business Intelligence May 2002. 



4.0 PHARMACEUTICAL SECTOR 33 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

minority operating in the nascent private sector. The twenty largest belong to the 
Pharmaceutical Industry Group within the National Iranian Industries Organisation. 

It is noted that 85% of pharmaceutical raw materials were imported, and of finished 
product there was a small amount of exports. Further details may be explored through 
reference (45). 

4.5.4 Jordan 

Prior to 2000 the country was typical of the region, importing raw materials and 
formulating/reformulating patented products as well as, frequently with Indian assistance, 
reverse-engineering patented products. There are 15 manufacturers of pharmaceuticals in 
Jordan (as of December 2005 47 ), but four of them 48 have some 90% of the market. Most 
of the newcomers that entered the market after 1990 were encouraged by the potential 
opportunities of breaking patents and the lucrative export market the Arabic non- 
signatories to the WTO, at that time of Iraq, Saudi Arabia and Algeria, for example.. In 
2001 the country signed a free trade agreement with the USA that required it alter its 
patent/copyright law to reflect international agreements on intellectual property, and the 
Drug Producers Federation said that the agreement confirmed their commitment to that. 

In addition as Jordan applied to the WTO at that same time the new laws have to comply 
with the TRIPS requirements of accession. 

4.5.5 Saudi Arabia 

Saudi Arabia does not manufacture significant quantities of pharmaceutical products, 
though it imports semi-finished product which is then repackaged, labelled and exported. 
The market is significant, with imports of some USD 1.5 billion. The country has applied 
for WTO accession, and as a part of the process has to resolve its complicated sets of 
laws regarding patents. 

4.6 Market Segmentation by Therapeutic Area 

Table 4.6 and graph 4.6 show the split in pharmaceutical spend in a typical OECD country 
(United Kingdom) this is purely shown for exemplary purposes only, but does demonstrate 
the high and increasing spend on cardiovascular products, CNS products and the 
significant decrease in Gl products. 



47 World Pharmaceutical Market: Espicom Business Intelligence. December 2005 

48 Arab Pharmaceutical Manufacturing Company, Dar al Dawa, Hikma Pharmaceuticals, JPM 



4.0 PHARMACEUTICAL SECTOR 34 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-C-00-04-00435-00 



Table 4.6 Cost of prescriptions dispensed in various disease areas UK 1995-2003 USD millions 





1995 


1996 


1997 


1998 


1999 


2000 


2001 


2002 


2003 


Gastro-intestinal 
system 


956 


14.51% 


1,158 


1 5.06% 


1,283 


14.61% 


1,287 


13.27% 


1,281 


1 2.08% 


1,130 


10.80% 


1,087 


9.97% 


1,202 


9.48% 


1,334 


9.53% 


Cardiovascular 
system 


1,180 


17.91% 


1,401 


1 8.22% 


1,644 


18.70% 


1,921 


19.82% 


2,251 


21.22% 


2,398 


22.92% 


2,587 


23.74% 


3,192 


25.17% 


3,684 


26.31% 


Respiratory system 


817 


1 2.40% 


935 


12.16% 


1,046 


1 1 .90% 


1,156 


1 1 .92% 


1,170 


1 1 .03% 


1,129 


10.79% 


1,149 


10.54% 


1,269 


10.01% 


1,337 


9.55% 


Central Nervous 
System 


805 


12.21% 


1,016 


13.21% 


1,259 


14.33% 


1,504 


15.51% 


1,668 


15.73% 


1,717 


16.41% 


1,884 


1 7.29% 


2,253 


1 7.76% 


2,485 


1 7.75% 


Infections 


429 


6.51% 


438 


5.70% 


455 


5.18% 


445 


4.60% 


461 


4.35% 


430 


4.11% 


394 


3.62% 


423 


3.33% 


436 


3.12% 


Endocrine System 


527 


8.00% 


627 


8.16% 


745 


8.48% 


845 


8.71% 


930 


8.77% 


950 


9.08% 


1,011 


9.27% 


1,184 


9.33% 


1,275 


9.11% 


Obstetrics and 
Gynecology 


151 


2.30% 


148 


1 .93% 


165 


1 .88% 


195 


2.02% 


228 


2.15% 


256 


2.44% 


284 


2.60% 


339 


2.67% 


379 


2.71 % 


Malignant disease 


185 


2.80% 


222 


2.88% 


257 


2.92% 


293 


3.02% 


493 


4.65% 


351 


3.35% 


373 


3.42% 


435 


3.43% 


483 


3.45% 


Nutrition and blood 


211 


3.21% 


231 


3.00% 


273 


3.11% 


316 


3.26% 


343 


3.23% 


354 


3.38% 


376 


3.45% 


430 


3.39% 


477 


3.40% 


Musculoskeletal and 
joint disease 


349 


5.29% 


390 


5.07% 


416 


4.73% 


421 


4.34% 


447 


4.21 % 


437 


4.18% 


423 


3.88% 


490 


3.86% 


544 


3.89% 


Eye preparations 


85 


1 .29% 


92 


1 .20% 


110 


1 .25% 


124 


1 .28% 


139 


1.31% 


144 


1 .37% 


154 


1.41% 


174 


1 .37% 


183 


1.31% 


Ear, nose and 
oropharynx 


73 


1.10% 


84 


1.10% 


92 


1 .04% 


99 


1 .02% 


100 


0.95% 


92 


0.88% 


91 


0.83% 


99 


0.78% 


105 


0.75% 


Skin 


284 


4.31% 


334 


4.34% 


355 


4.04% 


368 


3.79% 


361 


3.40% 


333 


3.18% 


338 


3.10% 


370 


2.92% 


379 


2.71% 


Immunological 
products 


151 


2.30% 


156 


2.03% 


183 


2.09% 


185 


1.91% 


184 


1 .74% 


192 


1 .84% 


181 


1 .66% 


189 


1 .49% 


204 


1 .46% 


Anaesthesia 


3 


0.05% 


3 


0.04% 


5 


0.06% 


5 


0.05% 


5 


0.05% 


5 


0.04% 


4 


0.04% 


6 


0.05% 


6 


0.04% 


Other (including 
dressings and 
appliances) 


382 


5.80% 


454 


5.91% 


499 


5.68% 


530 


5.47% 


542 


5.11% 


546 


5.22% 


561 


5.15% 


629 


4.96% 


689 


4.92% 


TOTAL 


6,590 




7,688 




8,788 




9,695 




10,604 




10,464 




10,897 




12,684 




14,000 





49 



Source: uk ABPI: figures converted to USD at prevailing exchange rate 



4.0 PHARMACEUTICAL SECTOR 



35 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



30.00% 
25.00°/c 
20.00% 
15.00% 




1995 1996 1997 1998 1999 2000 2001 2002 2003 

Gastro-intestinal system — ■ — Cardiovascular system 



Respiratory stystem 



Central Nervous System 



Infections 



Endocrine System 



Obstetrics and Gynaecology 



Malignant disease 



Nutrition and blood 



Musculo-skeletak and joint disease 



Eye preparations 



Ear, nose and oropharynx 



Skin 



Immunologica products 



Anaesthesia 



Others (including dressings and applia 



4.0 PHARMACEUTICAL SECTOR 



36 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



5.0 MEDICAL PRODUCTS SECTOR 

5.1 Introduction and Definition 

Table 5.1 gives abbreviated selected headings from the Harmonisation Code for medical 
appliances and devices. This defines the area of study for this report. Section 5.2 gives 
the actual import figures for this area and looks at comparative data for the region. 

Table 5.1 selected HS headings of Section 18 Chapter 90, Heading 9018 ff 



HS Code 



ECG machines 



90181130 



Ultrasonic scanning apparatus 



90181200 



MRI scanners 



90181300 



Scintigraphic apparatus 



90181400 



Electro-diagnostic apparatus 

UV/IR Equipment 

Syringes 



90181900 
90182000 
90183100 



Tubular needles for sutures etc 



90183200 



Needles, catheters etc 



90183900 



Dental drill engines 



90184100 



Dental Instruments 



90184900 



Ophthalmic Instruments 

Other medical instruments & appl. 

Mechanical therapy appliances 



90185000 
90189000 
90191000 



Ozone/oxygen/aerosol therapy 



90192000 



Breathing appliances 



90200000 



Orthopaedic or fracture appliances 



90210000 



Artificial joints 

Orthopaedic & fracture appliances 

Artificial teeth 

Dental fittings 



90213100 
90211900 
90212100 
90212900 



Artificial parts of the body 



90213000 



Artificial joints for orthopaedic purps. 



90213100 



Artificial parts of the body 



90213900 



Hearing aids 



90214000 



(Heart) pacemakers 

Articles or appliances, worn or carried 

Computer tomography 



90215000 
90219000 
90221200 



X ray for dentistry 



90221300 



X-ray for medicine 



X-ray - other 



90221400 



X-ray - other 

alpha, beta, gamma ray therapy 
for other uses 

X-ray tubes 

X-ray generators, other 



90221900 



90222100 
90222900 
90223000 



90229000 



5.0 MEDICAL PRODUCTS SECTOR 



37 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



5.2 Medical Device Imports into Iraq 

Iraq does not have a significant manufacturing industry in the defined areas, thus the total 
size of the market is effectively the import figures. In addition as most of these devices, 
appliances and consumables are being purchased through the MoH procurement system 
for supply to either the hospitals or specialist clinics, the gross official import figures should 
provide a good indication as to the size of the market. 

This situation may change in the relative near future, however, with the announcement in 
February of 2007 of the construction of a factory for syringes (and the author assumes 
other medical equipment) funded by an Iranian initiative. 

To look at the overall import trade of Iraq with the rest of the world, the five principal HS 
Headings have been taken as below (abbreviated): 



Heading 


Description 


9018 


Instruments and appliances used in medical, surgical, dental and veterinary ... 


9019 


Mechano-therapy appliances, massage apparatus ... 


9020 


Other breathing appliances and gas masks excluding protective masks ... 


9021 


Orthopaedic appliance, including crutches, surgical belts and trusses 


9022 


Apparatus based on the use of X-rays or of alpha, beta or gamma radiation ... 



These are then tabulated in table 5.2, and the results, by source, graphically displayed in 
graph 5.2. 



Table 5.2 Medical Products Exports to Iraq 



50 



Source 


H.S 
Heading 


1999 


2000 


2001 


2002 


2003 


2004 


2005 


Jordan 


9018 








8,731,059 


31,340,976 


7,440,510 


5,880,806 




9019 








18,299 




93,311 


49,585 




9020 








1,410 




6,266 


21,691 




9021 








1,379,618 


184,537 


1,687,902 


440,183 




9022 








158,351 


197,184 


410,800 


293,403 


Dubai 


9018 














3,152,739 




9019 














44,217 




9020 














410 




9021 














156,015 




9022 














15,248 


EU25 


9018 


30,870,620 


32,429,721 


96,659,992 


95,517,521 


48,849,828 


26,744,418 


40,415,355 




9019 


801 ,338 


1,105,497 


4,622,138 


13,610,132 


3,970,524 


2,586,108 


1,091,784 




9020 





285,569 





102,756 


25,889 


1,002 


76,775 




9021 


2,044,125 


2,598,756 


6,572,082 


8,749,421 


195,447 


601,701 


766,142 




9022 


8,523,082 


24,519,762 


11,819,973 


25,785,609 


45,310,962 


16,284,170 


4,272,399 


Switz. 


9018 










60,728 


53,571 


2,997,887 




9019 


















9020 


















9021 










2,504,229 


574 


345,193 




9022 














146,835 


India 


9018 










15,248 


150,474 


19,305 




9019 


















9020 


















9021 














4,856 



1 Source: Individual country and trading block statistics: Comtrade 



5.0 MEDICAL PRODUCTS SECTOR 



38 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 






9022 










9,497 




36,277 


USA 


9018 










619,071 


8,045,058 


6,539,860 




9019 








30,600 


418,104 


694,169 


553,701 




9020 










3,254 


365,427 


3,711,578 




9021 












1,030,837 


343,125 




9022 








306,815 


65,399 


1,515,838 


7,221,113 


Japan 


9018 








550,488 


75,703 


119,818 


1,020,433 




9019 












129,735 


461,706 




9020 


















9021 


















9022 










7,586,974 


88,161 


2,318,398 


Russian 
Fed 


9018 








1,429 






2,551 




9019 


















9020 


















9021 


















9022 














8,735 


China 


9018 








169 


69,653 


136,275 


1 ,485,340 




9019 














31,008 




9020 














600 




9021 














11,613 




9022 










9,211 




1,947,213 


Pakistan 


9018 














1,232 




9019 


















9020 


















9021 


















9022 
















Turkey 


9018 










394,051 


1,820,727 


1,928,863 




9019 










38,458 


226,147 


315,939 




9020 










12609 




34,715 




9021 










2403 


759,561 


353,129 




9022 










18,126 


1,310 


795,633 


Totals 


9018 


30,870,620 


32,429,721 


96,659,992 


104,800,666 


81,425,258 


44,510,851 


63,443,139 




9019 


801,338 


1,105,497 


4,622,138 


13,659,031 


4,427,086 


3,729,470 


2,547,940 




9020 





285,569 





104,166 


41,752 


372,695 


3,845,769 




9021 


2,044,125 


2,598,756 


6,572,082 


10,129,039 


2,886,616 


4,080,575 


2,420,256 




9022 


8,523,082 


24,519,762 


11,819,973 


26,250,775 


53,197,353 


18,300,279 


17,055,254 


Total of 
totals 












141,978,065 


70,993,870 


89,312,358 



Graph 5.2 Sources of medical appliance and device imports into Iraq 2005 

Medical Imports into Iraq 



2005 



Iran (0.13%) 
Turkey (3.83%) 
Pakistan (0.00%) 
China (3.89%) 
Russian Fed (0.01% 
Japan (4.25' 



USA (20.54%) 






India (0.07%) 
Switzerland (3.90%) 



Jordan (7.48%) 

bai (3.77%) 




EU 25 (52.13%) 




5.0 MEDICAL PRODUCTS SECTOR 



39 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



5.2.1 Comparative Market Size 

Table 5.2.1 sets out the regional spend on medical products. 

Table 5.2.1 Iraq Comparative Market Size and Potential Market Value; medical 
products 2000 



Country 


GDP/capita 
(USD) 


Med dev spend/capita 
(USD) 


Yemen 


397 


1.11 


Iraq 


1,060 


4.41 


Syria 


1,158 


2.22 


Morocco 


1,270 


1.99 


Egypt 


1,300 


3.04 


Iran 


1,633 


3.07 


Algeria 


1,764 


2.50 


Jordan 


1,794 


15.42 


Tunisia 


2,170 


7.16 


Turkey 


2,660 


10.01 


Lebanon 


4,734 


20.94 


Libya 


5,031 


10.77 


Oman 


7,672 


8.69 


Saudi Arabia 


8,355 


14.47 


Bahrain 


10,874 


20.00 


Kuwait 


14,672 


22.38 


Israel 


15,985 


8.59 


UAE 


19,393 


54.48 


Qatar 


27,918 


21.67 



Graph 5.2.1(a) Iraqi market in comparison to other MENA countries 
Medical Devices Spend vs GDP 

USD per Capita 2000 



: 


: 








UAE 










Jordan 


Lebanon Bahralri Uwait Qatar 
Saudi Arabia 










Turkey 


Libya 




I 






Tunisia 




- 






Iraq 

Egyplran 
™ r r§cco 




1 - 




Yemen 

H ! ¥ I I 


i i i 1 







o 



±! 100 



1,000 



10,000 



100,000 



GDP per capita 



5.0 MEDICAL PRODUCTS SECTOR 



40 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Graph 5.2.1(b) Iraq in comparison to neighbouring markets 
Medical Devices Spend vs GDP 

USD per Capita 2000 



S 



a 

00 

S 

'5. 
id 
O 

<E 
D- 



Iraq 


™ 


— 








Egypt 


Iran 














Algeria 


— 


Syria 


Morocco 








— 


1 1 1 1 1 1 



.060 



1,158 



,270 1 ,3 C 

Per Capita GDP 



,633 



.764 



5.2.2 Medical Products by Sub-Sector 



The Iraqi medical device market is set out in table 5.2.2. This gives a value for imports in 
2000, and then an estimate for the size of the market, by sub-sector in 2003 and a forecast 
estimate as to the value of the market in 2008. This was estimated on the 'AAGR' i.e., 
growth rate of 5.4% by the cited authors. 



Table 5.2.2 Iraq medical device market by sub-sector 



51 





2000 


2003 


2008 










Medical Device Market 
















Domestic Production 


n.a. 






Imports (USD mill) 


97 






Exports (USD mill) 









Imports as % of market (est.) 


n.a. 






Major Domestic Mfrs 
















Projected Medical Device Market 








Market (USD mill) 




63 


80 


AAGR% 




5.4 


5.4 


Per capita (USD 




2.9 


5.4 










By sector (USD Millions) 








Bandages and other medical supplies 




5 


7 


Medical X-ray film 




2 


2 


Rubber surgical gloves 




2 


2 



51 World Medical Market Report 2003; Espicom Business Intelligence March 2003 



5.0 MEDICAL PRODUCTS SECTOR 



41 



Pharmaceutical and Medical Products in Iraq 



IZDIHAR— USAID Contract #267-0-00-04-00435-00 



Medical, surgical or laboratory sterilisers 




<1 


<1 


Wheelchairs 




1 


1 


Contact lenses 




2 


2 


Medical equipment 




31 


40 


Electro-medical 




7 


9 


Syringes, needles & appliances 




8 


10 


Dental instruments and appliances 




1 


2 


Ophthalmic instruments and 
appliances 




1 


1 


Other instruments and appliances 




14 


18 


Therapy apparatus 




3 


4 


Orthopaedic/prosthetics goods 




11 


13 


X-ray apparatus 




7 


9 


Medical furniture 




1 


1 



5.2.3 Conclusion 

Given the lack of domestic manufacture, there is a significant opportunity for a domestic 
import substitution manufacturing opportunity. This will obviously rely on competencies 
and expertises, not explored in this report, but should not be discounted. 



5.0 MEDICAL PRODUCTS SECTOR 



42 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

6.0 MEANS OF PHARMACEUTICALS 
AND MEDICAL PRODUCTS 
DELIVERY 

6.1 Introduction 

As noted in the introduction to this document the pharmaceutical and medical product 
sector is characterised by the nature of the command economy structure of the Iraqi 
economy. Prior to the invasion the Ministry of Health, through its wholly owned 
organisation 'Kimadia' was responsible for the purchase of pharmaceuticals and medical 
products, their distribution throughout the entire public health service network, and indeed 
sold product on to the private sector. A small private pharmacy sector developed after 
1994, however this is small in volume terms, though possibly quite profitable where the 
pharmacy sells subsidised product to the retail customer. Most medical products as 
defined in Section 5 are managed solely through the public network, however some 
orthopaedic aids, for example wheelchairs, for which there is unfortunately a broad need, 
may be purchased in the market. 

This chapter gives the role and functions of the Ministry of Health and its departments, 
then moves on to discuss procurement in the public sector, followed by the private sector, 
and then prescription and retail pharmacy. 

6.2 The Public Sector 



6.2.1 The Ministry of Health (MoH) 52 

The Health Ministry (MoH) was created in its current form in the middle of the 20 th century. 
Its defined task is to provide health and medical services to all Iraqi citizens in normal and 
emergency circumstances. The Ministry also administers the health and medical centres 
of Iraq, and has a duty to provide best care to all. 

The Ministry has developed health care within Iraq, expanding hospital, consultative and 
healthcare facilities in spite of the various conflicts and resultant damage inflicted over the 
last several decades. 

6.2.2 Directorates and Facilities of Health Ministry 

6.2.2.1 Minister's Office 

The Minister's office administrates and organizes the Ministry's affairs and Minister's work 
program. This office also facilitates, in co-operation with the Information Department, 
meetings between the Minister with the media, and with private citizens. 



52 The following paragraphs were extracted and modified from the Ministry of Health website 
( www.healthiraq.org ) and added to and adapted from other sources as required. It is acknowledged that some 
transliteration, or interpretation, may have slightly distorted the intent of the original text, this is without 
intention, and the text is designed to give the reader guidance. 

6.0 MEANS OF DELIVERY 43 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

The Institute of Forensic Medicine reports directly to the Minister's Office. 

6.2.2.2 Minister's Deputy of Administrative Affairs 

The Minister's Deputy has a private office assisting him with his duties; in particular this 
office also follows up the administrative plan and its implementation in cooperation with the 
other directorates of the ministry. 

6.2.2.3 Ministry's Deputy of Technical Affairs 

The Ministry's Deputy for Technical Affairs has a private office which is responsible for any 
technical implementation and evaluation of health services throughout the health service 
including the health centres. 

6.2.2.4 Office of the National Consultant for Mental Health 

This office was founded after April 2003. Its task is to raise the performance and efficiency 
of the psychiatric health services within the context of the current situation in Iraq to tackle 
personal crisis arising from it. 

6.2.2.5 Legal Consultant's Office 

The Legal Consultant's Office was founded after April 20043. The role of the Office is to 
broadly restudy health legislation, and to submit legal counsel for cases to the Ministry. 
These include MoH case, those from other Directorates within the Ministry, and the 
Directorates in the Governorates. 

It also is responsible for checking all previous contracts under the 'oil for food program'. 

It is tasked with restudying the invitations for contracts and bids, and is to submit draft 
regulations and laws to the state council related to the private sector. 

6.2.2.6 Ministry's Office 

The Office comprises the following departments: 

International Health Department: Negotiates bilateral and multilateral agreements; 
implementation of agreements with WHO and the International Organization for 
Migration (IOM) and others; organising overseas treatment for patients; overseas 
training of MoH employees and foreign expert visits for treatment and training. 

Information Technology Centre: Provision of ICT within the MoH, the Health 
Directorates and healthcare facilities including computers and accessories; 
provision of web services; co-operation on ICT projects with external bodies; 
networking all healthcare facilities provision and management of appropriate 
software; creation of an electronic library and providing user-friendly access; 
provision of centralised ICT services; creation and maintenance of a health-care 
statistical database. 

Printing Department: Provision of printing services to MoH and all healthcare 
facilities; posters, bulletins and publications in co-operation with Information 
Department and Health Education Department; provision of external revenue 
generating printing services; establishing new printing facilities and re-training 
accordingly. 



6.0 MEANS OF DELIVERY 44 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

Information Department: Press relations; press releases; interviews with Health 
Minister, DGs; developing Journal of Health and Health Magazine; preparation of 
health education material on the risks of addiction; preparation of broadcast 
material including a weekly health programme, documentary material on the 
achievements of the MoH; information programme materials on current health 
situation; provision of materials for the web site; maintaining and developing a 
library of resources; market research to evaluate MoH performance; promoting 
public relations activities and a department in the Health Directorates, the 
Governorates, training the staff and supervising their performance. 

Follow-Up Department: Communicating centrally originated instructions from MoH 
or other government bodies, to all MoH Directorates; monitoring their 
implementation; dissemination of instructions and decisions of the Minister the 
periodical meetings of the DGs and the Health Directorates; follow-up of urgent 
applications for drugs or equipment ensuring these are communicated to the 
appropriate authority by the most efficient means. 

This office has several sections. It implements the following tasks: 

1 - Following-up and executing instructions issued by high level authorities. 

2 - Arranging agreements with friendly states. 

3 - Giving opportunities for treatment patients abroad. 

4 - Providing printing requirements, issue prints and publications. 

5 - Information covering of health activities. 

6 - Securing nets and electronic sites to the ministry and its facilities in addition 

to maintain computers. 

6.2.2.7 General Inspector's Office 

The role of the office is to improve the performance of all the public sector health 
institutions, audit the same and investigate public complaints. In addition it has a role in 
the supervision of the private sector. Ten teams of six members (medical, admin, financial 
etc) each have been formed to define the problems and issues facing the Health Offices as 
a prelude to their resolution. The office is also responsible for the management of public 
sector healthcare employee claims against the department. 

In the private sector two employees from private hospitals, two pharmacies closed two 
private drug warehouses suspended for two months and respectively the employees 
concerned have been prosecuted and sentenced for drug trafficking. (2004) 

6.2.2.8 Legal, Financial and Administrative Directorate 

The roles of the Directorate include the human resources function; accounting and finance; 
legal and counselling functions, including investigatory functions; facilities management 
and transportation. Provision of creche facilities. The Directorate comprises the following 
Departments: 

Department of Personnel 
Department of Accounting 
Department of Legal Affairs 
Department of Administrative Affairs 



6.0 MEANS OF DELIVERY 45 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

6.2.2.9 Directorate of Medical Operations and Specialized Services 

Founded after the April 2003 its role was to transfer military medical treatment from the 
Ministry of Defence to MoH. Subsequently its role has since expanded to include 
supervision of the ambulance service; emergency medicine; disaster control; management 
of specific medical categories; e.g., the armed forces, disabled; special needs; the prisons, 
airports and aviation. This includes provision of emergency medical supplies, when 
required. 

The following rehabilitation centres have been established within the health-care structure 
in Baghdad and the Governorates to provide medical services for rehabilitation of the 
disabled: 

Al-Salam disabled rehabilitation centre 
Al-Musel disabled rehabilitation centre 
Thi-Qar disabled rehabilitation centre 
Al-Ghadeer disabled rehabilitation centre 
Al-Basra disabled rehabilitation centre 
Al-Hamza disabled rehabilitation centre 
Babylon disabled rehabilitation centre 
Baghdad artificial limbs centre 
Al-Anbar disabled rehabilitation centre 
Karkuk disabled rehabilitation centre 
Al-Thor city specialist health clinic 
Al-Shomookh City specialist health clinic 

The above centres, co-ordinate with the non-governmental humanitarian organizations: 

to rehabilitate/rebuild health institutions 

to provide medical services and disabled rehabilitation 

to re-organize the National Assembly for Rehabilitation 

to coordinate with the National Assembly for Minor Affairs through a joint 

Minors Victim Care Programme 

Recently MoH has formulated the following facility within the Prisons of Iraq Rehabilitation 
Office/Ministry of Justice. These institutions provide the medical & health services for 
rehabilitating prisoners with medicine and vaccines free of charge: 

the health centre of Al-Resafa car and bus depot 

the medical clinic of Kadhmya Awal Prison 

the medical clinic of Al-Rahmanya Prison for Juveniles 

A memorandum of understanding has been signed with the MoH and the Iraqi Army for 
providing the Army with contracted medical and management staff from MoH for four 
years. Health centres for the army have been established for treating, examining and 
evacuating members of the armed forces and their families: 

Al-Taji Centre 
Karkoush Centre 
Al-Kasak Centre 

Selective centres in Baghdad/Mousel/Basrah have been established for examining 
volunteers for the army. 



6.0 MEANS OF DELIVERY 46 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

To provide medical treatment to the police and army, and emergency treatment to the 
public, Al-Amin specialised medical clinics have been established in Al-Ressafa and Al- 
Karkh. 

A National Guard medical clinic has been established and is supervised by the Medical 
Operation & Specialized Services Office in Baghdad to provide the military staff with 
medical care treatment, and emergency medical and surgical teams are provided to cover 
terrorist activity. 

6.2.2.10 Directorate of Planning and Resource Development 

Its roles are the implementation of MoH strategic plans and health policies and budgeting. 
It also supervises the distribution of technical, health and medical professions to MoH 
facilities. It also evaluates the delivery of healthcare services, identifying areas of failure, 
problems and issues in order to resolve these, advising on organisational issues within the 
MoH and its Directorates. 

The tasks of the Directorate (abbreviated) include the following: 

1 . Reformation of the operation of the health facilities 

2. Support for decentralised functions in crisis management 

3. Human resources training function; including medical, technical and 
administrative, domestically and overseas 

4. Research according to the needs of MoH and national and international 
developments 

5. Providing administrative support for library creation 

6. Developing Continuous Professional Development (CPD) programmes 

7. Development of on-line teaching facilities 

8. Development of regulations for the practice of nursing and midwifery 

9. Raising the standard of nurse training 

1 0. Reducing the length of nurse training 

11. Improve the efficiency of data collection and compilation and statistical 
analysis within the health service 

12. Maintaining medical and human resources within the governorates and 
districts 

1 3. Construction of a central database through the internet 

14. Co-ordination with the Ministry of Higher Education and Scientific Research 
for the provision of advanced studies in line with the needs of the MoH 

15. Achieving the maximum benefit from the available financial resources from 
the budgets of the Directorates, or other external resources (donors, NGOs, 
etc.) as they become available 

16. Monitoring and evaluation of implementation of the health strategy training 
and development 

6.2.2.1 1 Directorate of Technical Affairs 

The Directorate supervises the operations of state and private health facilities. It also sets 
the conditions for licenses, licenses and registers new pharmacies and laboratories. The 
Directorate determines the need for and the quantities of pharmaceuticals and medical 
appliances that may be sold to or by them. 

It establishes committees to evaluate disease status. 

It comprises the following departments: 



6.0 MEANS OF DELIVERY 47 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

Registration Department: responsible for the documentation, and registration of 
health-care companies and pharmacies 

Curative (Clinical) Department: supervises the operations of the curative (clinical) 
department, health and family planning clinics, private and public, inherited 
diseases, notably anaemia; supervision of distribution, and redistribution of medical 
equipment. 

Advisory Committee Department: Submits advice on clinical practice, preventive 
medicine, and laboratory services; is responsible for medical equipment 
distribution; advises on pharmaceutical distribution and deficiencies, and evaluates 
research and studies in health-care facilities. 

Laboratories Department: Supervises laboratories providing its own services and 
private establishments, monitoring performance. Co-ordinates with the import 
committees needs assessment for medical equipment and their distribution. 
Supervises the quality control programmes and assists in restoring standards in 
deficient laboratories. 

Medical Committees Department: Acts as guardian to incompetent individuals; 
establishes specialist medical committees to review cases and makes 
recommendations for treatment overseas. 

Pharmacy Department: Supervises and evaluates pharmacy services in health 
care establishments, controls the import, distribution and use of drugs in the public 
and private sector. 

Department of Herbal Medicine: Promotes the benefits and uses of medicinal 
herbs in primary health care; explains risks of random use; maintains and 
advertises the list of internationally recognised safe herbs; establishes 
specifications as to type, dose and cautionary notes; co-ordination with other 
government departments to promote the herbal medicines industry. 

Department of Oral Health and Dentistry: Technical supervision of clinical practice; 
prevention of oral and dental disease; population surveys of dental and oral health; 
securing medical, technical and support staff in the sector in co-operation with 
Directorate of Planning and Resources, and the WHO; import of dental equipment 
and instruments in co-ordination with the appropriate Departments. 

6.2.2.12 Directorate of Projects & Engineering Services 

This is a newly established directorate, formerly the Department of Buildings Planning, its 
main task is to build and rehabilitate health facilities which belong to the MoH. It is also 
responsible for developing, evaluating and following-up reconstruction works implemented 
by the Ministry, NGOs and others from overseas donors throughout Iraq, and as required, 
the direct implementation of small and large projects belonging directly to the Directorates 
of the Ministry. 

6.2.2.13 Directorate of Public Health and Primary Health Care 

This Directorate was founded at the inception of the MoH. Its role is in preventive 
medicine, supervising the provision of food, medicines, immunisation, and health 
awareness with the aim of creating a healthy environment for all, in conjunction with the 
other MoH Directorates, other government and non-governmental facilities. 



6.0 MEANS OF DELIVERY 48 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

6.2.2.14 General Company for Marketing Medicines and Medical Appliances 

This directorate, also known as the State Company for the Importation and Distribution of 
Drugs and Medical Appliances, trades as Kimadia and until 1994 was the sole body 
allowed to import, market and distribute drugs sera, vaccines, scientific and medical 
appliances and equipment and services. The company is the sole importer to the public 
sector. It also arranges contracts and agreements both inside and outside Iraq and opens 
stores and branches to the medicine information bureau inside and outside the country in 
order to achieve its targets. See section 5.4.2 on procurement. 

The company's development plan included (for 2005) (abbreviated): 

1 . provision, storage and distribution of drugs and medical supplies 

2. maintenance & service of medical equipment in all health directorates 

3. training of technical, engineering and medical staff of the company 

4. using price control mechanisms to reduce costs to consumer and pharmacy 

5. co-ordinate and encourage domestic production 

6. computerisation of all activities including more effective inventory 
management 

7. increase and improve communication technology, including e-mail, tender 
and bid promotion using the web to achieve greater participation and 
competition to achieve keener pricing. In addition, increase understanding 
of modern drug development technology and medical appliances 

6.2.2.15 Directorate of Popular Medical Clinics 

This Directorate administrates the popular medical clinics and evening health insurance 
clinics. It is also responsible for the provision of all requirements to ensure health services 
to the populace without charge, including providing medicines not available in the local 
market, and those for chronic diseases. 

6.2.2.16 Directorate of Medical City 

This Directorate supports the medical specialities in various hospitals and centres with the 
aim of rehabilitating clinics and providing up to date equipment to examine and treat 
patients at low cost. 

6.2.2.17 Health Directorates of Baghdad and the Governorates 

These are the functional and operational boards which manage the public health sector by 
Governorate. 

6.3 Procurement in the Public Sector 



6.3.1. Introduction 

Within the public sector the Ministry of Health (MoH), through its directorates, is 
responsible for the procurement and supply of all pharmaceutical and medical products, 
consumables and similar to the public sector, including the public and specialist hospitals 
and the care clinics. The MoH maintains a list of approximately 2,500 pharmaceutical 
items which are divided into the following categories: 

Chronic diseases 



6.0 MEANS OF DELIVERY 49 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

Antibiotics 
Hormones 
Vaccines 
Others 

In principal the government and hospitals only look to the supply of antibiotics, hormones, 
vaccines; the private sector has input into analgesics, anti-cough syrups, OTC products 
etc. 

Pharmaceuticals are provided through mixture of imports and domestic production. 

6.3.2 The Procurement Process 53 

Each governorate (province) has a nominated centre, the District Health Board, normally in 
one of the principal hospitals, where requirements for the following year for that 
governorate are collected, co-ordinated and collated. A single submission is then 
prepared and submitted to Baghdad. 

Diagramme 6.3.2 Relationships in the first stages of the procurement process 

DISTRICT HEALTH BOARD 



REGIONAL HOSPITALS/CLINICS | SPECIALISED HOSPITALS/CLINICS 



I 



MOH TECHNICAL DEPARTMENT 



I 



DEPARTMENT OF CENTRALI SED NEEDS 



I 



GENERAL COMPANY FOR MARKETI NG DRUGS 

AND MEDICAL APPLIANCES 

(Kl MADIA) 

The submission is made to the MoH Technical Department who then appraises the 
submission, looking for example for requests for obsolete drugs, the potential to substitute 
newer, or more efficacious, treatment (s). A variety of committees are involved in this 
process and then a lists for pharmaceutical products and equipment are prepared. Once 
this stage is reached the lists are passed to the 'Department of Centralised Needs' where 
quantitative elements of requirements are prepared. A statistical appraisal (in theory) is 
made on the basis of known factors, e.g., population, disease prevalence etc., this 
includes a discount factor applied on the basis that it is believed that each health district 
over estimates its requirements for the forthcoming year. 

The specialist hospitals submit their own requirements which are then evaluated 
separately. 

The lists are then evaluated for: 



53 Sources: Private communication; Presentation by Dr Firas Hilmi, Al-Assad Group of Companies, July 
2005, UNDGAVB Working Group paper 'Medicines and Medical Supplies', undated arising from paragraph 
2. 15 of 'Health' Working Paper of UNAVorld Bank October 2003. David Nabarro WHO./'Information' 
Ministry of Health website: www.healthiraq.org/English/home/htm 

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domestic availability 

quantity against availability 

quality of imports and (versus) domestic production 

price 

Tenders are then issued by the General Company for Marketing Drugs and Medical 
Appliances 54 ('GMC herein) - a wholly owned operating company of the MoH, trading as 
Kimadia, a directorate of the Ministry of Health (MoH). There are two large tenders each 
year of 1,000 + items, in addition to smaller tenders for individual hospitals or 
governorates. All tenders are placed on the page at www.kim-moh.net . 

There will be restricted tenders for specialist supplies, for regular 'contract' suppliers and 
then public tenders will be published (including on the internet) for common supplies. All 
those tendering must be an authorised tenderer. 

TENDER IS ISSUED (KIMADIA) 



I 



WWW.KIM-MOH.NET 



I 



AUTHORISED TENDERER 



I 



SUBMIT A TENDER 

Tenders are received and evaluated and purchase orders made. 

Evaluation is conducted by technical or consultant committees, they will decide on the best 
3-5 offers. These will then be passed to the Import Committee of Kimadia who will then 
determine the supplier by requesting and comparing what additional benefits, e.g., 
discounts, training, etc. that the tendered might offer. The Import Committee's decision is 
then passed to the Ministerial Purchasing Committee who will then approve, reject or 
modify additional requests. 

The final decision is passed back to the DG of Kimadia, who will instruct that a contract be 
issued. This latter will be shown to the company's representative for approval and then 
passed to the Kimadia department responsible for the issue of letters of credit (LC). When 
funds are available the contract is issued and passed to the contractor for signature. The 
LC is then released. 

As the orders are received they go to the Kimadia distribution depots (see 6.3.3), where 
samples from each batch are sent to the National Quality Control Laboratories (NQCL) for 
technical evaluation. Penalties against the contract are exacted if the quality is not within 
criteria, or cancelled if sufficiently reduced. If the delivery is approved then Kimadia will 
start distributing on a proportional basis to all District Boards that requested that item. 



54 Also known as the State Company for Importation and Distribution of Drugs and Medical Appliances' 
trading under the name 'Kimadia' . 

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Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

6.3.2.1 Becoming a Recognised Supplier/Submitting a Tender 55 

6.3.2.1.1 Manufacturer 

A manufacturer (and supplier) should submit a letter of authorisation that states: 

the speciality of the company 

the name an Iraqi 'scientific bureau 56 

the name of a pharmacist licensed by the Iraqi syndicate of pharmacists as 

a sole and exclusive representative 

The letter of authorisation should be 'legalised' (counter-stamped) by: 

The Chamber of Commerce in the country of origin 

Ministry of Foreign Affairs in the country of origin 

Iraqi Embassy or Representative in the country of origin 

6.3.2.1.2 Supplier 

A supplier, in addition to the requirements of 6.3.2.1.1 should also provide the following: 

names and specialities of the companies represented 

a letter from the manufacturing company authorising you to represent them, 

'legalised' as above 

You must have sole and exclusive rights to represent that manufacturer in the territory of 
Iraq for all of its products, and the letter (above) must state that. 

6.3.2.2 Domestic Preference 

As in most closed economies the government operates a policy for preferential treatment 
of domestic suppliers. In this instance the government will pay an (approximate) 20% 
margin over the imported price for a specific product 57 if it is available, or can be made 
available, from domestic manufacture. 

6.3.3 Pharmaceutical Distribution 

The greater part of pharmaceutical distribution in Iraq is conducted by Kimadia. A full 
preliminary assessment of the Kimadia system is given in Appendix E . The organisation 
was founded in 1966 and is by repute a highly centralised and fairly secretive organisation. 
It comprises a distribution network of some 7,500 public, semi-public and private central, 
governorate and district warehouses and distribution centres. 

Up until 1994 it was the sole body authorised to distribute medicines, to both the private 
and the public sector. 



55 Presentation by Dr Firas Hilmi, Al-Assad Group of Companies, July 2005 

56 A recognised pharmaceutical importer 

57 Personal communication, exemployee of Kimadia, qualified pharmacist 

58 Situational Analysis Report for Kimadia: Iraq Health System Strengthening, Abt Associates Inc 1 1 July 
2003 for USAID 

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It was proposed that Kimadia be privatised in the autumn of 2003, however these plans 
were suspended, and is believed by the author to be operating in its traditional capacity. 

Because of the nature of the procurement system and inefficiencies within it, there are 
shortages of some, if not most, products and occasionally drugs are distributed past their 
expiry date, all of which is blamed on Kimadia. 

6.4 Procurement in the Private Sector 

In the private sector the importers are the 'Scientific Bureau', most of whom are acting as 
agents or representatives of overseas manufacturers or manufacturers agents. They 
make their purchases and either directly, or through the Kimadia distribution network 
imports go to the wholesalers and to the retail pharmacist, or to the private healthcare 
institution. Diagramme 6.5.1 shows the distribution of medicines into the private retail 
market. 

6.5 Prescription, Dispensing and Distribution of Medicines 

6.5.1 The Pharmacy Licence 

The pharmacy licence costs ID 70,000 per month which it is understood can further 
exchange hands on the black market for up to 2,000,000 ID. The person making an 
application for the licence has to be a qualified pharmacist. A single pharmacist may have 
a chain of pharmacies. 

Within the Iraqi health system there are a set of drugs that can only be dispensed by 
prescription. A list of these drugs is displayed in every pharmacy, both public and private. 
This list corresponds to the list of controlled substances found in most Western countries, 
e.g., alkaloids, substances prone to abuse etc. On presentation of the prescription in the 
public pharmacy the products are dispensed, if available for a single fee of ID250, or in 
some special circumstances ID500. (In the private pharmacy, the current price of the 
dispensed product would be charged, noteworthily in the case of imported specialist 
products). If a specific medicine for less common conditions is prescribed, the pharmacist 
will order this in from the distributor - mainly Kimadia. If the medicine is for a chronic 
condition not available on prescription the pharmacist will again buy in the product for the 
individual. 

Diagramme 6.5.1 Pharmaceutical distribution chain into the private retail market 

I MPORTS DOMESTI C MANUFACTURES 




PRIVATE PHARMACY 



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Common medicines (over the counter, OTC) since 2003 are found in the market place, as 
are prescription medicines. Until the restoration of a formal regulatory environment this 
situation is likely to continue for the foreseeable future. 

The prescribing doctor will frequently, if not always, identify the pharmacist that the patient 
should go to for his medicine, and that they have a business relationship. The historical 
precedence of this is unknown, but it is widely believed, certainly amongst some 
communities, that this is of some standing. When purchasing a medicine the selection 
criteria is the brand and then the price (if for self-medication), for example, notwithstanding 
the large volume of Jordanian products within the market place there is a stated 
preference for European brands, and Iraqi brands are respected for their perceived quality 
and low prices. 

6.5.1.1 Current Conditions 

It appears that the system of control of the pharmaceutical distribution chain has collapsed 
(to a greater or lesser extent). It is widely reported 59 that pharmaceuticals are available 'on 
the street' i.e., in most of the main markets. Many of these products are obtained from 
MoH licensed pharmacies, both in the hospitals and clinics and the independent sector. In 
addition there is a significant trade in illicit imports. Considerable concern is expressed 
over this trade, because apart from flouting regulations the standard of the products so 
obtained is debatable. It is also apparent that quantities are sold illegally from the MoH 
stock holders and licensed pharmacies to the street traders at favourable prices. The MoH 
intends to tackle this practice, however acknowledges corruption within its own ranks, with 
drugs being supplied directly from the Ministry. 

Obviously this trade is encouraged by popular demand, and is, however, exacerbated by 
an increasing shortage of trained pharmacists within the community - exacerbated by the 
current security situation, which includes the targeting of many professional groups 
including pharmacists. This is compounded with the closure of several teaching 
institutions60, shortage (loss, theft and effect of sanctions) of equipment, access to 
scientific literature, with consequential impact on the healthcare system. 

In addition there has been an increasing willingness of licensed pharmacists to dispense 
proscribed, or restricted, medications to addicts and drug abusers, much misuse or 
inappropriate use of antibiotics, the latter of which will undoubtedly have long-term 
detrimental potential for healthcare in the country. It is noted that non-compliance with 
demand for illegal dispensing, or attempts to control the supply of medicines can be, and 
often is, met with violent assault or assassination. 

The consequences are a significant shortage of essential medicines, antibiotics in 
particular, treatments for chronic conditions, e.g. diabetes, c.v. disease, and others. In 
addition it is claimed that 97% of medicines are of unknown origin. 

6.6 Pharmaceutical Promotion 

There is no pharmaceutical promotional activity as recognised in the West. Detailing is 
unknown. It appears that the only means of encouraging the use of one brand over 



59 Sources: various: including Iraq Directory interview with Dr Mustafa Ali www.iraqdirectory.com , 
interviews with Dr Ayad Ali, reported by Pamela Mason in Tomorrow's Pharmacist (January 2005)and The 
Pharmaceutical Journal, 274: ppl 15-629 Jan 29 2005 www.pionline.com and private communications 
6(1 Including the Universities of Mosul and Anbar. 

6.0 MEANS OF DELIVERY 54 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

another is to understand the nature of the additional benefit that needs to be delivered to 
the MoH, or the influencing of individual specialists where they are able to specify specific 
product. However where the state purchases there is no apparent means of influence. 

6.7 Medical Products, Appliances and the Like, Procurement 
and Dispensing 

Kimadia is responsible for the purchase and distribution of products within the public 
sector, the private sector however does act as a source of supply for orthopaedic aids 
such as wheelchairs, crutches etc. So much so that where the private sector supplies the 
public sector won't. 

6.8 Kimadia Improvement and Enhancement Programme 

There is a US Government funded initiative about to be launched that is to address many 
of the issues raised in this document, and make appropriate recommendations for the 
reform of the Kimadia organisation, and ultimately to their implementation. 



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7.0 RISKS AND ISSUES 

7.1 TRIPS 

One factor that needs to be explored is the impact of WTO accession discussions on the 
domestic pharmaceutical manufacturing base. 

Pharmaceutical manufacture in the Near and Middle East is characterised by the 
production of generics, the reformulation of active pharmaceutical ingredients, and blatant 
imitation. On the application of Jordan and Egypt to the WTO, for example, the obligations 
under the TRIPS element of the Agreement had to be enforced. In the case of Jordan of 
the fourteen pharmaceutical companies that existed only four currently operate to a 
significant extent. Co-incidentally these were the original manufacturers and had 
established themselves in the domestic and regional markets. The other companies had 
moved into the manufacture of pharmaceuticals, particularly in the generic and imitation 
market as they saw the profitability of the sector. However, following Jordan's accession 
to the WTO, and the decision of the Jordanian Government to fully implement the TRIPS 
agreement much of the business of these latter companies fell away. 

In the case of Egypt, the specific exclusion of pharmaceuticals (along with foodstuffs) from 
product patentability 61 was a major lobbying point amongst the US industry prior to Egypt's 
accession to the WTO. The US industry argument was that adoption of formal patent 
recognition and protection would enable an environment to foster investment, technology 
transfer, research and development to encourage the growth of the domestic industry. 
However a substantial industry established itself in Egypt, albeit by the production of 
generics, imitation and reformulation of patented products with the establishment of some 
40 manufacturing companies (that figure includes multi-nationals) domestically. The non- 
acceptance of patent law was seen as protectionism for the nascent pharmaceutical 
industry that relied on the copying, or breaking the patent, or reverse-engineering, 
reformulating, patented drugs. Egypt also developed a successful (and increasing) export 
market. However, following the accession to the WTO and the passing of TRIPS 
compliant legislation, which allowed a transition period to the end of 2004, with pipe-line 
protection the industry has not suffered as much as was feared. Subsequently the country 
has benefited from substantial inward investment with, for example, the establishment of a 
new manufacturing facility by AstraZeneca this year worth some USD 32 million. A more 
detailed discussion of TRIPS legislation applied to Egypt is given by the Egyptian Initiative 
for Personal Rights 62 . 

Within Iraq the original Patent and Industrial Specimens Act No 65 was enacted in 1970. 
This was subsequently amended and published in the Official Gazette in September 
1999 63 . These amendments made it possible to register patents for pharmaceutical and 
medicinal preparations, and established the patent period as twenty years (ten years 
renewable in two instalments of five years) However this was again subsequently 
amended under CPA order # 81 April 2004, to provide full patent protection. At the time of 



61 Submission of the Pharmaceutical Research and Manufacturers of America (PhRMA) for the National 

Trade Estimate Report on Foreign Trade Barriers (NTE) 2000. Dec 3 1999. Consumer Project on 

Technology, www.cptech.org 

52 Egyptian Initiative for Personal Rights. 8. Patent protection in Egypt. 

www.eipr.org/en/reports/trips05/enstudl 1 .htm 

63 SABA Bulletin November 2000 



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writing the law is being revised and updated to include full compliance with WTO TRIPS 
requirements. The main issue is not the legal status of patent protection; it is (will be) the 
enforcement of such law. 

7.2 Tenders and Contracts 

As described in this document, the process through which non-domestic suppliers bid for 
tender, though apparently transparent, is open to abuse, for example in the manner of 
obtaining 'authorised tenderer'. It is also very open to individual and institutional rent- 
seeking. This is particularly apparent in the bidding process where concepts such as 
'additional benefit' are left to a degree unexplained. For accession this procedure will have 
to be simplified and become more open. 

7.3 Pricing, Price Control, and Price Differential 

A significant issue is the differential pricing for domestic suppliers, which acts as a state 
subsidy and is an anti-competitive practice. Though it is undoubted that Iraq would be 
allowed a transition period before full compliance, this has to be addressed. 

7.4 Other Issues 



7.4.1 GMP 

For Iraqi products, or producers to become attractive to legitimate external investors it will 
be necessary to ensure compliance with GMP standards. This will consist of a number of 
elements; for example, training manufacturers in GM practice, training the MoH inspectors 
in modern practice and inspection techniques, staffing and maintaining the inspection 
teams, and, in addition, when a company wishes to export, external (non-Iraqi, perhaps 
UK, EU or FDA) teams to inspect. 

7.4.2 Illicit Supply 

One area of significant concern within Iraq is the illicit supply of pharmaceuticals/medicines 
both as contraband, counterfeit and of dubious (and frequently unknown) origin. 
Appropriate policing (including customs and border controls) mechanisms need to be put 
in place to protect the rights of the manufacturer, maintain reputation, and protect the 
populace. 

7.4.3 Distribution and Logistics 

These are currently (for legitimate supply) effectively entirely in the hands of the MoH and 
its subsidiary 'Kimadia', thus creating a state monopoly. Also given that 'Kimadia' restricts 
the supply of drugs and makes the choices over distribution the system again is open to 
rent seeking, both at the personal and institutional level. 



7.0 RISKS AND ISSUES 57 



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IZDIHAR— USAID Contract #267-0-00-04-00435-00 



7.5 SWOT 



Strengths 



Active manufacturing - public, private and illegal 
Strong market demand 
Active government procurement 
Entrepreneurial culture developing 



Weaknesses 



Monopsony purchases 

Unregulated market sales (secondary/black/grey), of illegal imports, 

inadequately controlled domestic production, ineffective and sub-standard 

products 

Lack of regulatory enforcement of standards for GMP, GLP 

Pharmaceutical sales, product sourcing, patent protection etc 

Bureaucratic 

Price controls 

Differential pricing regimen 

Economic uncertainty 

Low per capita consumption 

Government contracts unpredictable (only tendered when money available) 

Unreliable payment system 

Health care system in disarray 

Loss of healthcare professionals 

Shortage of qualified technical staff 

Sectarian issues 



Opportunities 



Potential privatisation programme(s) 

As public sector finances improve, per capita expenditure will grow 

Major import substitution opportunity 

Opportunity to licence in products 

Opportunity to buy into local producers with technology transfer package 

Opportunity in niche sectors, e.g., phials, sterile products etc 

Undervalued assets 

Unused facilities 

Joint ventures 

Specialist Manufacturing - Long-term 



Threats 



Security situation (personnel) 

Rent seeking (bribery, corruption, protection rackets etc) 
Security situation (property), threat of theft, looting, vandalism 
Lack of effective banking and cash management systems 



7.0 RISKS AND ISSUES 



58 



Pharmaceutical and Medical Products in Iraq IZDIHAR— USAID Contract #267-0-00-04-00435-00 

8.0 CONCLUSIONS AND 
RECOMMENDATIONS 

8.1 Conclusions 

It is apparent from this study, and many others cited, that there are significant opportunities 
for investment in the Iraq pharmaceutical and medical products sectors. 

However, as a result of many decades of operating under a command economy, and the 
last several decades of war, sanctions and internal strife a variety of measures need to be 
undertaken before a liberal market economy can exist in this sector. 

It is understood that a government which wishes to create a public health system, 
underwritten by the state must have control of its own purchases; however there exist 
constraints within the system, as outlined in the document which allow opportunism and 
rent seeking. 

This report was written with limited capacity to engage the Ministries and the domestic 
manufacturing sites, so there are inherent frailties within it. The recommendations are 
therefore prefaced with the need to conduct further research as conditions improve and 
circumstances permit. 

The pre-requisite for investment in the state sector is the creation of appropriate 
privatisation and restructuring mechanisms. The Government of Iraq and its agencies may 
not wish for a variety of reasons to privatise in one move, however, structure must be 
developed that allow the opportunity for private-public partnership programmes (PPP), 
private funding initiatives (PFI) or similar constructs. The following recommendations 
outline some of the preliminary steps to be taken. 

It is essential that reform of the state enterprises be undertaken to remove some of the 
gross inefficiencies that occur within the state sector, cross subsidisation, false pricing, 
embedded work practices, and in the pharmaceutical sector, non-compliance with GMP, 
though it is accepted that these aspects also exist within the private sector. 

In addition the non-transparent price subsidisation of goods, through the MoH to both the 
public and private sector has to be reformed. 

8.2 Recommendations 

This study by its nature was primarily a desk study with interviews being carried out 
whenever possible due to the means and circumstances under which was conducted, with 
restrictions on access to the factories, both public and private, and to the Ministry of 
Health. This preliminary study should be revised when conditions permit access to actual 
performance statistics, the Ministry of Health and its operating subsidiaries. 

It is apparent that the industry sectors considered are open to investment opportunity, 
however, the system constraints, explored in the body of the document, requires structural 
adjustment. Therefore, subsequent to the prime recommendation, the main 
recommendations of this report are of a policy and regulatory nature. 



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8.2.1 Formal definition of the nature, business and manufacturing assets of each 
of the state enterprises must be established. 

8.2.2 The rules, regulations, by-laws by which a (private) entity may make an 
offer to supply goods and, or, services to the state sector should be revised. 

8.2.3 The appropriate provision under extant company law for a company to 
freely compete in the new liberal market economy without prejudice or 
favour (to include the provisions that will be made under free market 
legislation) should be able to be applied under the Kimadia procurement 
system. 

8.2.4 The proper registration of all businesses with appropriate deterrent and 
sanctions should be in effect. 

8.2.5 The Ministry of Health should carry out, and is so enabled to carry out, its 
legal responsibility to ensure GMP and GLP, in each and every instance. 

8.2.6 The MoH, and in particular, its' operating subsidiary known as Kimadia 
should be thoroughly restructured, to enable transparency in its dealings, 
and that its functions be restricted. 

8.2.7 The system of licensing, approvals, and registration with its inherent 
opportunities for rent seeking should be reviewed and appropriate deterrent 
and sanction be introduced. 

8.3 Private Sector Investment 

There are a number of specific routes to private investment in the pharmaceutical sector in 
Iraq. These can be briefly summarised as: 

An external supplier 
An importer and distributor 
A low value manufacturer 
A high value manufacturer 

Each of these may be evaluated separately; however, within the current system each of 
these has major constraints: 

External supplier. Some major elements include competition with embedded 
contractors for major supplies; enabling proof of facility, i.e., to be sole contractor or 
agent for a manufacturer. 

Private importer/distributor: Current conditions require complicity with 
pharmaceutical distributorships; most of these are already in the hands of a select 
few wholesalers/distributors, in addition the requirement for licensing provides a 
barrier to entry, and the opportunity for volume/margins is low as pricing of most 
products is mainly in the control of the MoH/Kimadia as their distribution is heavily 
subsidised. 

Low value manufacturer: The main barriers to entry are the capital cost of 
establishing a business; the real main competitors are the low value 



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(unlicensed/illegal) manufacturers, the company still has to be licensed and 
authorised as a (legal) supplier. The opportunity to supply the private sector is 
small as commodity products are already produced in quantity. Opportunities for 
non-domestic players are small if not negligible. 

High value manufacturer. Again barriers to entry include the high capital cost of 
establishing, and maintaining plant, the current domestic market is small, however 
this might be an option for the future. 

In the short term, until the conditions set out in the recommendations are fulfilled there are 
few opportunities for external investors, except where these are government backed. In 
the long-term, with the additional support of the government funded research institutes 
there is a good prospective for the pharmaceutical industry in Iraq, albeit initially at the 
domestic level. 

An initial approach is potentially for a long-term investment at the SME level. It is 
suggested this would have to be a joint venture with a current operator, for cash and 
technology, be that manufacturer come from the current private, or the re-structured public 
sector. 



8.0 CONCLUSIONS AND RECOMMENDATIONS 61